Indian economy to grow slower than earlier government estimates, per capital income expected to rise 11 per cent to ₹1,25,397.
The data released by the Central Statistics Office (CSO) on Monday projects economy would grow at 7.2 per cent this fiscal, against 6.7 per cent in FY18. The CSO has also kept GDP estimate lower than the RBI’s projections, though it is still higher than many other forecasts.
Although most private economists have already lowered India’s growth forecast to around 7 per cent for FY19, the RBI still pegs it at 7.4 per cent.
"The growth in GDP during 2018-19 is estimated at 7.2 per cent as compared to the growth rate of 6.7 per cent in 2017-18," the Ministry said in the "First Advance Estimates of National Income, 2018-19".
The per capita income is also estimated to rise by over 11 per cent to reach ₹1,25,397.
The growth projections are based on higher manufacturing and agriculture sector output that is expected to accelerate India's GDP (gross domestic product) growth rate.
”Real GDP or GDP at Constant Prices (2011-12) in the year 2018-19 is likely to attain a level of ₹139.52 lakh crore, as against the 'Provisional Estimate of GDP for the year 2017-18' of ₹130.11 lakh crore, released on 31st May 2018," the Ministry of Statistics and Programme Implementation said.
Notably, in October 2018, Economic Affairs Secretary Subhash Chandra Garg had told PTI that the country's GDP for the current fiscal should exceed the 7.4%, which is close to estimate projected by the Reserve Bank of India.
The growth rate of gross value added (GVA) is anticipated to grow at 7 per cent from 6.5 per cent rate achieved in the previous fiscal.
"Real GVA, i.e. GVA at Basic Constant Prices (2011-12), is anticipated to increase from ₹119.76 lakh crore in 2017-18 to ₹128.09 lakh crore in 2018-19.
"Anticipated growth of real GVA at Basic Prices in 2018-19 is 7 per cent as against 6.5 per cent in 2017-18," the Ministry statement said. GVA includes taxes but excludes subsidies.
According to the data, "manufacturing", "electricity, gas, water supply and other utility services", "construction" and "public administration, defence and other services" are the economic activities which registered a growth of over 7 per cent on a YoY basis.
Meanwhile, the growth in the trade, hotels, transport, communication and services related to road-casting is estimated to be 6.9 per cent.
Financial, real estate and professional services are estimated to be growing at 6.8 per cent.
However, agriculture, forestry and fishing sector, and mining and quarrying sector are likely to grow at 3.8 per cent and 0.8 per cent, respectively.
Sector-wise, YoY GVA at basic prices for 2018-19 from the consolidated sector of agriculture, forestry and fishing showed a growth of 3.8 per cent from 3.4 per cent in 2017-18.
In addition, GVA in 2018-19 from "manufacturing" sector grew at 8.3 per cent as compared to 5.7 per cent, said the report.
"IIP manufacturing registered a growth of 5.6 per cent during April-October 2018-19. The Wholesale Price Index (WPI), in respect of the manufactured products, registered a growth of 4.1 per cent during April-November 2018-19," the estimates document said.
Economic Affairs Secretary Subhash Chandra Garg tweeted his reaction: "India remains fastest growing major economy globally. At current prices GDP grows by 12.3 per cent rising to 188.41 lakh crore. Per capita GDP at current prices rises to 141,447."
"Especially gratifying, impressive and promising is the growth in gross fixed capital formation (GFCF). 12.2 per cent real growth in 2018-19 compared to 7.6 per cent in in 2017-18 heralds excellent pick-up in investment activity. GFCF as a ratio to GDP has risen to 32.9 per cent from 31.4 per cent in 2017-18."
According to India Ratings and Research's Director for Public Finance and Principal Economist Sunil Kumar Sinha, the growth projection was on expected lines. "As expected, GDP growth recovered sharply in FY19 from 6.7% in FY18. However, the GDP growth in FY19 would have been even better but for the global headwinds caused by an abrupt rise in crude oil prices, strengthening of USD and rising global trade friction,” he was quoted in media reports.
"These have been quite unsettling for the Indian economy. However, some of the positives that may guide the economy into the new fiscal from demand side are healthy pick-up in investment growth….”, Since added.
Source: Business Insider, The Hindu BusinessLine