India GDP Growth Pegged Lower at 6.5 Percent

The Indian economy is expected to grow at a slower 6.5% in 2017-18 compared to the 7.1% in 2016-17, the Central Statistics Office releasing the first advance estimates of GDP growth for current financial year said.

Most private economists have pared India’s growth forecast to 6.2 to 6.5% for the 2017-18 fiscal year, citing the impact of the chaotic launch of Goods and Services Tax in July on business activities, ZeeNews reported.

Reversing a five-quarter slide in GDP growth, Indian economy bounced back from a three-year low to expand by 6.3% in July-September as manufacturing revved up and businesses adjusted to the new GST tax regime.

The GDP growth in the second quarter of 2017-18 compared to 5.7% in April-June, the lowest growth rate since the Narendra Modi government took office, and 7.5% in the September quarter of the previous fiscal.

“The growth in GDP during 2017-18 is estimated at 6.5% as compared to the growth rate of 7.1% in 2016-17,” the ministry of statistics and program implementation said in its estimate of national income for 2017-18. The CSO has primarily used seven-month data to extrapolate for the full fiscal.

Gross value added was also projected to expand by 6.1% in 2017-18, slowing from 6.6% in the preceding fiscal year, according to the first advance estimates of national income for 2017-18, released by the CSO.

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. Manufacturing sector growth has been forecast at 4.6% in 2017-18, compared with the 7.9% expansion provisionally estimated for 2016-17.

“In agriculture, what we are seeing is a base effect because last year we saw a very high growth rate that followed two years of drought,” statistics and program implementation secretary and chief statistician of India, TCA Anant, said at a press conference in New Delhi.

“In terms of production, the total production would probably be the second highest in a very long time. It is not unusual growth in agriculture in a good year. Anticipated growth of real GVA at basic prices in 2017-18 is 6.1% as against 6.6% in 2016-17.”

The data disclosed that sectors like public administration, defense and other services; trade, hotels, transport, communication and services related to broadcasting; electricity, gas, water supply and other utility services; and financial, real estate and professional services registered a growth rate of over 7%.