India's growth projected at 4-year low of 6.5% this fiscal

11 Jan '18

2 min read

Economic growth in 2017-18 is estimated to hit a four-year low of 6.5 per cent, against 7.1 per cent in 2016-17 and the pace of agricultural expansion is likely to fall from 4.9 per cent in the previous year to 2.1 per cent in the current fiscal due to decline in kharif output, according to data released by the Central Statistics Office (CSO).

The projected growth rate is not only lower than what was forecast by the Economic Survey in the range of 6.75-7.5 per cent, but also slightly higher than the 6.4 per cent registered in 2013-14. However, it is much higher than the 5.5 per cent in 2012-13.

The first advance estimate for India’s gross domestic product (GDP) growth released by the Central Statistics Office (CSO) indicated massive rural distress as the agricultural output inflation rate is likely to fall to 0.7 per cent, according to a press release from the ministry of statistics and programme implementation.

Chief statistician TCA Anant said GDP growth would remain above 7 per cent from the fourth quarter of the current financial year.

Growth in gross value added (GVA) is expected to fall to 6.1 per cent this fiscal, much lower than the Reserve Bank of India’s forecast of 6.7 per cent. GVA had risen 6.6 per cent in the previous year.

The goods and services tax (GST) not only impacted manufacturing in the second quarter of FY18, when it was rolled out, but also in the first quarter due to pre-implementation jitters. GST also affected net taxes as these are projected to grow only 10.9 per cent in the current fiscal against 12.8 per cent in the previous year.

Manufacturing may see a growth rate of just 4.6 per cent in the current year against 7.9 per cent in the previous year. Investment seems to be reviving with gross fixed capital formation forecast to rise by 4.5 per cent against 2.4 per cent.

Services are also projected to go higher even as growth in government-backed public administration, defence and others is pegged to fall by 9.4 per cent against 11.3 per cent in the previous year. (DS)

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