India’s GDP growth pegged lower at 6.5% in 2017-18

The Indian economy is expected to grow at a slower pace of 6.5 per cent in the 2017-18 financial year compared to the 7.1 per cent growth recorded in the 2016-17 fiscal, the first advance estimates of gross domestic product (GDP) released by the Central Statistics Office (CSO) today showed.

Real gross domestic product (GDP) of the country at constant (2011-12) prices is likely to reach Rs1,29,85,000 crore in the fiscal year 2017-18, against the provisional estimate of GDP of Rs1,21,90,000 crore for the year 2016-17, released on 31 May 2017.

The growth in GDP during 2017-18 is estimated to be 6.5 per cent  compared to the growth rate of 7.1 per cent in 2016-17.

The estimate comes amidst a slowing of revenue growth after the introduction of the Goods and Services Tax in July last year.

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

Reversing a five-quarter slide in GDP growth, Indian economy bounced back from a three-year low of 5.7 per cent in April-June 2017-18 to expand by 6.3 per cent in July-September as manufacturing revved up and businesses adjusted to the new GST tax regime.

Real gross value added (GVA) at basic constant prices (2011-12) is anticipated to increase from Rs1,11,85,000 crore in 2016-17 to Rs1,18,71,000 crore in 2017-18. Anticipated growth of real GVA at basic prices in 2017-18 is 6.1 percent against 6.6 per cent in 2016-17.

The sectors which registered growth rate of over 7.0 per cent included 'public administration, defence 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'. Growth in the 'agriculture, forestry and fishing', 'mining and quarrying', 'manufacturing', and 'construction' is estimated to be 2.1 per cent, 2.9 per cent, 4.6 per cent and 3.6 per cent, respectively.

The estimate has been prepared by extrapolation of estimates of sector-wise indicators like Index of Industrial Production of first 7 months of the financial year, financial performance of listed companies in the private corporate sector available up to quarter ending September 2017, first advance estimates of crop production, accounts of central and state governments, information on indicators like deposits and credits, passenger and freight earnings of railways, passengers and cargo handled by civil aviation, cargo handled at major sea ports, sales of commercial vehicles etc available for first eight months of the financial year.

With the introduction of Goods and Services Tax (GST) from 1 July 2017 and consequent changes in the tax structure, the total tax revenue used for GDP compilation include non-GST revenue and GST revenue. For the year 2017-18, the Budget estimates of tax revenue as provided by Controller General of Accounts (CGA) has been used for estimating taxes on products at current prices. 

For compiling taxes on products at constant prices, volume extrapolation is done using volume growth of taxed goods and services and aggregated to get the total volume of taxes. Annual forecast of indicators which are available for first 7/8 months is based on regression using seasonal dummies to account for seasonal fluctuations. Some indicators like IIP has been compiled by dividing the cumulative value for the first 7 months of the current financial year by average of ratio of cumulative value of 7 months to the annual value of past years, CSO said.