Government Forecasts Reduction In 2017-18 GDP Growth To 6.5%

Government Forecasts Reduction In 2017-18 GDP Growth To 6.5%

Government Forecasts Reduction In 2017-18 GDP Growth To 6.5%

Among the sectors that are likely to register higher growth this fiscal are construction at 3.6% against 1.7% a year ago and trade, hotels, transport and communication and services related to broadcasting at 8.7% versus 7.8%.

The data will be based on the first advance estimates of crop production information on indicators like GST collections, deposits and credits, passenger and freight earnings of railways, passengers and cargo handled by civil aviation, cargo handled at major sea ports and sales of commercial vehicles available for the first seven months of the financial year.

The Central Statistics Office has revealed some estimates on Friday predicting that the gross domestic product (GDP) of Indian economy will grow at 6.5 percent in this fiscal year (2017-18).

"Real GVA, i.e, GVA at basic constant prices (2011-12) is anticipated to increase from '111.85 lakh crore in 2016-17 to '118.71 lakh crore in 2017-18".

India's GDP growth is forecast to slow down to a four-year low of 6.5 per cent in 2017-18 as it was hit by demonetisation and the rollout of a chaotic GST, which was changed repeatedly in the past six months to quell protests by traders and industry. "GDP growth of 6.5% for 2017-18 implies growth of 7% for the second half". Per capita income to fall too India's per capita income, a gauge for measuring living standard, is likely to witness a slower growth of 8.3 per cent at Rs 1,11,782 in FY 2017-18. The GDP in the first and second quarters of this fiscal grew at 5.7% and 6.3% respectively.

With the government struggling to meet the fiscal deficit, the upcoming budget is unlikely to announce mega public spending plans to boost economic growth.

Chief Statistician TCA Anant said, "The de-stocking disruption caused due to the GST implementation has impacted the full-year GDP estimates".

But what is worrying is that finance minister Arun Jaitley had projected a GDP growth of 11.75 per cent at current prices in his budget last February (Rs 168.47 lakh crore).

Within this, the GVA growth rate for "agriculture, forestry and fishing" is expected to slow sharply to 2.1%, compared with the previous year's 4.9% pace. Earlier, the country's GDP growth for the second quarter of the current fiscal that ended on September 30 was 6.3 per cent - up from 5.7 per cent reported during the first quarter of 2017-18. As for computing budget numbers such as fiscal deficit, advance estimates have been used.

According to Aditi Nayar, Principal Economist at ICRA: "The advance estimates for the full year have been based on limited data, which would be available for a period of 6-9 months for different sectors".

"Accordingly, the advance estimates for GDP and GVA growth appear to be understating economic expansion for FY2018, in our view".

The CSO's estimate on GDP growth for 2017-18 is even lower than the Reserve Bank's lowered projection of 6.7%.

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