Economic growth in the country is expected to be lower than last year at 7.1% as per the first advance estimate by the Central Statistics Office released on Friday. The first advance estimates of GDP, though in line with RBI’s latest forecast, have taken into account data for first seven-eight months of the financial year only.
“The growth in GDP during 2016-17 is estimated at 7.1% as compared to the growth rate of 7.6% in 2015-16,” it said. The Indian economy had expanded by 7.1% and 7.3% in the first and second quarter of the ongoing fiscal.
“This is not an ordinary year. We are carefully watching the data,” chief statistician TCA Anant said. “We didn’t use bank deposits and credit data for November in estimates because demonetization led to high degree of volatility,” Anant added.
The Reserve Bank of India had earlier last month cut the gross value added (GVA) forecast for current fiscal to 7.1% from 7.6% estimated earlier.
According to CSO, the anticipated growth of real gross value added (GVA) at basic prices in 2016-17 is pegged at 7% against 7.2% in 2015-16. The growth in the agriculture, forestry and fishing sector have been pegged at 4.1% compared to 1.2% in the previous year while that in mining and quarrying has been estimated to decline by 1.8% compared to a growth of 7.4% in 2015-16.
Manufacturing growth has been pegged at 7.4% vis-à-vis 9.3% in FY’16 while growth in electricity, gas, water supply and other utility services is estimated at 6.5% as against 6.6% in the previous year. Growth in construction sector is expected o be 2.9% vis-à-vis 3.9% in 2015-16 while growth in trade, hotels, transport, communication and services related to broadcasting is estimated to be 6% as against 9% in 2015-16. The advance estimates of the CSO are needed by the finance ministry to calculate the deficit numbers and also estimate the GDP for the next year. Previously, data was released around February 7. The release has been brought forward by a month as the Union Budget itself will be now presented on February 1 — a month ahead.
The government had on November 8 announced cancellation of legal tender of Rs 500 and Rs 1,000 notes. The only official output statistics for November as of now is of the core sector, up 4.9% in the month, down from 6.6% in the month before. The methodology usually adopted by the CSO for calculating advance GDP estimates is based on data available for certain months, based on which the likely scenario for the remaining months is projected.
Even rating agencies and broking houses have also cut their estimates of India’s GDP growth for 2016-17 in anticipation of temporary disruption in economic activity during the October-December quarter because of the cash crunch since the recall of high-value banknotes a month ago. While Fitch Ratings have lowered India’s GDP growth forecast for this fiscal to 6.9% from 7.4%, Morgan Stanley has cut down growth estimate to 7.4% from 7.7% for 2016 and to 7.6% from the earlier 7.8% for 2017 while it has pegged India’s growth at 7.8% for 2018.
India Ratings and Research has revised its growth forecast for 2016-17 to 6.8%, 100 basis points lower than its earlier projection of 7.8% while Ambit Capital has cut the country’s GDP estimate for 2016-17 to 3.5% from the previous 6.8%.
Source: economictimes.indiatimes.com