Published: Sat, January 06, 2018
Economy | By Melissa Porter

Reforms are yielding results, says Debroy on GDP estimate

Reforms are yielding results, says Debroy on GDP estimate

Financial, real estate & professional services will grow by 7.3% in 2017-18 as against 5.7% previous year.

The Central Statistics Office (CSO) in a press conference revealed the first advance estimates of national income at a press conference earlier today in the national capital.

The Central Statistics Office (CSO) will release the first advance estimates of GDP growth for 2017-18 on Friday, a practice it started previous year after the government shifted the presentation of the Union Budget to 1 February from end February.

"Real GVA, i.e, GVA at basic constant prices (2011-12) is anticipated to increase from '111.85 lakh crore in 2016-17 to '118.71 lakh crore in 2017-18". Will India close the current year (2017-18) at an annual growth rate at above 7 percent? Per capita income to fall too India's per capita income, a gauge for measuring living standard, is likely to witness a slower growth of 8.3 per cent at Rs 1,11,782 in FY 2017-18.

The Indian economy is forecast to grow at its slowest in four years in FY18 but is expected to pick up pace in the second half of the year. This means that India's fiscal deficit is likely to be higher than budgetary estimate 3.2% for fiscal 2017-18. The latest data comes weeks before the union budget for 2018-19 is presented in Parliament on February 1 and is expected to put pressure on the government to step up spending in key sectors such as the farming. The growth rate for "Agriculture, forestry and fishing" and "Mining and quarrying" are expected to be 2.1% and 2.9%, respectively in FY2017-18.

These will be the first official full-year growth estimates after GST's rollout.

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 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. Therefore, they are not fully factoring in the expected pickup in growth in the later months of FY2018, related to a favourable base effect and a "catch up" following the subdued growth momentum in H1 FY2018.

The International Monetary Fund (IMF) expects India's GDP to grow at 6.7 per cent in 2017-18. "But if the tax collections remain robust then the GDP growth could be higher", he said.

GDP growth picked up to 6.3% in the July-September quarter after slowing to a three-year low of 5.7% in the first quarter, signalling that the economic recovery had gathered momentum.

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