Published: Sat, January 06, 2018
Markets | By Rosalie Gross

Government estimates lower GDP for 2018-18 at 6.5%

Government estimates lower GDP for 2018-18 at 6.5%

According to Department of Agriculture and Cooperation's data, the production of food grains during the Kharif season of agriculture year 2017-18 was 134.67 million tonnes as compared to 138.52 million tonnes during the same period in 2016-17.

Here are five things to watch out for in the first advance estimates of GDP data for 2017-18.

India's economy is set for a slowdown in the financial year ending March 31 with the government pegging the gross domestic product (GDP) growth rate at 6.5% significantly lower than the growth rate of 7.1% last year.

The estimate of national income for 2017-18 released by the Central Statistics Office (CSO), the GDP at constant (2011-12) prices for 2017-18 is likely to attain a level of Rs 129.85 lakh crore. The crucial farm sector is estimated to grow 2.1% in 2017-18, slower than the 4.9% in the previous year, while the manufacturing sector may grow by an annual 4.6%, sharply lower than the 7.9% posted in 2016-17.

The government's statistics wing will have data only for additional one or two months than what it had for its second quarter (July-September) GDP estimate to make the full-year GDP growth projection. The Gross Value Added (GVA), which includes taxes, at basic constant prices (2011-12) is anticipated to increase from Rs 111.85 lakh crore in 2016-17 to Rs 118.71 lakh crore in 2017-18. "Implicit calculation suggests growth in the second half of 2017-18 will be better thatn the first". As the numerator swells and the denominator (GDP at current prices) shrinks, the fiscal deficit is likely to overshoot the target of 3.2 per cent in 2017-18 by a considerable margin.

The disruption introduced by the implementation of Goods and Services Tax is expected to take a major toll on the sector.

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The nominal GDP will be used as the benchmark for most indices in the 2018-19 budget to be presented by finance minister Arun Jaitley on 1 February.

The growth rate of the agriculture, fishing and forestry sector is expected to decline from 4.9% in 2016-'17 to 2.1% in 2017-'18.

The Gross Value Added (GVA) has been projected to be at 6.1 per cent versus 6.6 in the a year ago.

The CSO's GVA full-year growth estimate of 6.1%, compares with a 6.7% pace that the Reserve Bank of India had forecast at its December policy meeting.

India Inc expects the country's 2017-18 economic growth to be above the 6.5 per cent-mark due to a favourable base effect. "For FY 2018 as a whole, we continue to expect GVA and GDP growth to print at 6.5% and 6.7%, respectively, higher than the advance estimates of 6.1% and 6.5%", she said. Economists said the advance estimates may have been conservative in its assessment.

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