Economy set for slowdown in next fiscal


The services sector, which accounts for almost 60% of the economy, is estimated to grow 8.3% in 2017-18, higher than the 7.7% in 2016-17.

"The growth in GDP during 2017-18 is estimated at 6.5 per cent as compared to the growth rate of 7.1 percent in 2016-17", the Ministry of Statistics & Programme Implementation said in its estimate of National Income for 2017-18.

Meanwhiele, the CSO also projected that the manufacturing sector will grow at 4.6 percent in 2017-18, compared to 7.9 percent in 2016-17.

Growth in gross value added (GVA) - a broad measure of the value of all goods and services produced in the economy that strips out the impact of taxes and subsidies - also slowed to 6.1 per cent, sharply lower than the RBI's estimate of 6.7 per cent. The data showed per capita income is expected to be Rs 1,11,782 in 2017-18. This means that India's fiscal deficit is likely to be higher than budgetary estimate 3.2% for fiscal 2017-18. In the first half, GDP growth was only 6% because of the disruption caused by the goods and services tax (GST) and the lingering impact of demonetisation.

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.

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Meanwhile, agriculture is expected to grow by a mere 2.1 per cent this fiscal, while manufacturing is estimated to expand by 4.6 per cent. The second instalment of the Economic Survey released in August a year ago had seen growth at the lower end of the 6.75-7.5% range forecast in February.

The EAC-PM Chairman said the advance estimate numbers only reinforce what was already known - that reforms undertaken by the government will place the economy on an upward growth trajectory, without compromising on fiscal consolidation.

The CSO's estimate on GDP growth for 2017-18 is even lower than the Reserve Bank's lowered projection of 6.7%.

Worldwide rating agency Standard and Poor's had kept the growth outlook for India "stable" and rated the world's third-largest economy 'BBB-' in its latest report in November.

According to Aditi Nayar, Principal Economist at ICRA: "The advance estimates for the full year have been based on limited data, which would be available for a period of 6-9 months for different sectors". The CSO could actually estimate a faster GVA expansion in the final two quarters, implying but for slower-than-expected GST tax revenue collections, overall growth could have been faster. "While this gives the impression of a downturn, in reality, growth has bottomed out in the first quarter of the current year and is now on a recovery", the Confederation of Indian Industry (CII) said in a release.