At present, we expect GVA growth to rise to around 6.7% in Q3 FY2018, sasy Aditi Nayar, Principal, Economist 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. 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.
Accordingly, the advance estimates for GDP and GVA growth appear to be understating economic expansion for FY2018, in our view.
At present, we expect GVA growth to rise to around 6.7 percent in Q3 FY2018 and a sharp 7.5 percent in Q4 FY2018. For FY2018 as a whole, we continue to expect GVA and GDP growth to print at 6.5% and 6.7 percent, respectively, higher than the advance estimates of 6.1 percent and 6.5 percent.
Sectors which may grow at a higher pace in FY2018 relative to the advance estimates include mining and quarrying, manufacturing, construction, trade hotels etc., and financial, real estate and professional services.
The healthy uptick in volumes displayed by many sectors in November 2017, is expected to strengthen in the remainder of FY2018, benefiting from a favourable base effect and a 'catch up' following the subdued first half.
Accordingly, manufacturing is likely to display healthy expansion in volumes in H2 FY2018, which should result in a substantial improvement in capacity utilisation on a YoY basis. However, the elevated commodity prices, especially fuel prices, are likely to inflate input costs, exerting pressure on manufacturing margins and tempering the improvement in GVA growth for this sector.
The full impact of the unfavourable kharif harvest on agricultural GVA would be seen in Q3 FY2018. While rabi sowing has been slightly lower than the year-ago levels, the below-normal post monsoon rainfall and y-o-y decline in reservoir levels do not portend a sharp improvement in yields.
Therefore, the pace of GVA growth of agriculture, forestry and fishing is expected to record a moderate uptick in Q4 FY2018. We expect growth of agriculture, forestry and fishing in FY2018 to be in line with the advance estimate of 2.1 percent.
After recording a healthy performance in Q2 FY2018, the volume growth of coal, natural gas and electricity generation have dipped sharply in October-November 2017. However, the rally in commodity prices suggests an uptick in earnings and GVA growth for mining and quarrying in Q3 FY2018.
While consumer sentiment is yet to recover, the construction sector is likely to report a base effect-led improvement in H2 FY2018.
Service sector growth is also expected to improve in H2 FY2018, benefitting from a favourable base effect as well as back-ended spending by the state governments.
The available data for the GoI for October-November 2017 indicates a sharp growth in total expenditure, which would support service sector expansion in Q3 FY2018. However, the limited fiscal space available to the GoI for incurring additional expenditure may weigh upon service sector growth in Q4 FY2018.
The advance estimates for 2017-18 are based on economic indicators for the first 7 or 8 months of this financial year, such as Index of Industrial Production of first seven months of the financial year, financial performance of listed companies in the private corporate sector available up July-September quarter, first advance estimates of crop production, accounts of central and state governments, information on indicators like deposits and credits, passenger and freight earnings of railways, passengers and cargo handled by civil aviation, cargo handled at major sea ports, sales of commercial vehicles etc. available for first eight months of the financial year, the CSO said.
India to grow by 6.5% in 2017-18— Gautam Chikermane (@gchikermane) January 5, 2018
That takes its GDP growth ranking lower than China’s 6.8%
That’s a lower growth rate on a smaller GDP base
India needs to envision a $10 trillion GDP
And grow and grow and grow...
GDP Growth estimate of 6.5 % for FY 2017-18 will disappoint only Modi's critics not that it is low but because they were hoping it would be much lower.— GhoseSpot (@SandipGhose) January 5, 2018
All round and inclusive development is essential, says Narendra Modi
Prime Minister Narendra Modi on Friday said in tweet that all round and inclusive development is essential. Even in the states with strong development indicators there would be areas which would need greater push for development.
All round and inclusive development is essential. Even in the states with strong development indicators there would be areas which would need greater push for development: PM @narendramodi— PMO India (@PMOIndia) January 5, 2018
Most economists pared India’s growth forecast to 6.2 to 6.5 percent
Most private economists have pared India’s growth forecast to 6.2 to 6.5 percent for the 2017/18 fiscal year, citing the impact of the chaotic launch of Goods and Services Tax in July on business activities.
Economy expected to do well, says Soumya Kanti Ghosh
"It is difficult for GDP to cross 7 percent this fiscal unless the base is revised downwards. The economy is expected to do well in the third and fourth quarter," SBI Research Chief Economist Soumya Kanti Ghosh.
GDP forecast an eye opener for Narendra Modi govt, says Dinesh Unnikrishnan, Finance Editor, Firstpost
The CSO estimate of 6.5 percent GDP growth forecast for fiscal year 2018 will not make the Modi-government happy. If the projection comes true, this will be the lowest growth in four fiscal years.
This will logically add pressure on the government, which has been facing criticism on the economy front. With economy set to slowdown in fiscal year 2018, the bigger worry is how this will impact the economy on the ground particularly with respect to the employment scenario.
If one looks at the manufacturing segment, the projected growth of 4.6 percent is the lowest in at least six years ever since the new series started. Remember, manufacturing sector growth is critical for job creation.
Another interesting takeaway is that farm sector, which employs most number of people, has its share to GDP falling steadily.Share of agriculture as percentage of GDP has come down to 14.6 percent from 15.2 percent last year while industries contribution dropped to 30.6 percent from 31.2 percent. Overall, the GDP forecast is an eye-opener for Modi government to introspect on areas where it needs to take targeted policy actions.
TCA Anant sees GDP may grow at 7% in next two quarters
Chief statician TCA Anant says GDP grew 5.7 percent in first quarter, 6.3 percent in second quarter so the trend indicates that the growth may be more than that in coming quarters.
Forecast lower than RBI, IMF estimates
The Reserve Bank of India had retained its forecast for the current fiscal at 6.7 percent. The International Monetary Fund expects India's GDP to grow at 6.7 percent in 2017-18.
Gross Fixed Capital Formation at current prices
Gross Fixed Capital Formation (GFCF) at current prices is estimated at Rs 43.84 lakh crore in 2017-18 as against Rs 41.18 lakh crore in 2016-17. At constant (2011-12) prices, the GFCF is estimated at Rs 37.65 lakh crore in 2017-18 as against Rs 36.02 lakh crore in 2016-17.
In terms of GDP, the rates of GFCF at current and constant (2011-12) prices during 2017-18 are estimated at 26.4 percent and 29 percent, respectively, as against the corresponding rates of 27.1 percent and 29.5 percent, respectively in 2016-17.The GFCF is expected to register growth rate of 6.5 percent at current prices and 4.5 percent at constant prices.
Government Final Consumption Expenditure
Government Final Consumption Expenditure (GFCE) at current prices is estimated at Rs 19.77 lakh crore in 2017-18 as against Rs 17.69 lakh crore in 2016-17.
At constant (2011-12) prices, the GFCE is estimated at Rs 14.54 lakh crore in 2017-18 as against Rs 13.40 lakh crore in 2016-17.
In terms of GDP, the rates of GFCE at current and constant (2011-12) prices during2017-18 are estimated at 11.9 percent and 11.2 percent, respectively, as against the corresponding rates of 11.7 percent and 11.0 percent, respectively in 2016-17.
Private Final Consumption Expenditure
Private Final Consumption Expenditure (PFCE) at current prices is estimated at Rs 97.75lakh crore in 2017-18 as against Rs 89.27 lakh crore in 2016-17. At constant (2011-12) prices, the PFCE is estimated at Rs 72.38 lakh crore in 2017-18 as against Rs 68.07lakh crore in 2016-17.
In terms of GDP, the rates of PFCE at current and constant (2011-12) prices during 2017-18 are estimated at 58.8 percent and 55.7 percent, respectively, as against the corresponding rates of 58.8 percent and 55.8 percent, respectively in 2016-17.
Per capital income
The per capita income in real terms (at 2011-12 prices) during 2017-18 is likely to attain a level of Rs 86,660 as compared to Rs 82,269 for the year 2016-17. The growth rate in per capita income is estimated at 5.3 percent during 2017-18, as against5.7 percent in the previousyear.
GVA at basic prices for 2017-18
GVA at basic prices for 2017-18 from ‘manufacturing’ sector is estimated to grow by 4.6 percent as compared to growth of 7.9 percent in 2016-17.
The private corporate sector growth in the manufacturing sector for 2017-18 is estimated using latest available information on major listed companies during first half of financial year 2017-18.
The private corporate sector growth (which has a share of over 70 percent in the manufacturing sector) as estimated from available data of listed companies is 7.4 percent at current prices during 2017-18.
Agriculture, forestry sectors will see see lower growth rates
The ‘agriculture, forestry and fishing’ sector is likely to show a growth of 2.1 percent in its GVA during 2017-18, as against the previous year’s growth rate of 4.9 percent.
The GVA estimates of this sector have been compiled using the First Advance Estimates of production of major kharif crops for 2017-18 and targets based on rabi sowings
Real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices
Real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices in the year 2017-18 is likely to attain a level of Rs 129.85 lakh crore, as against the Provisional Estimate of GDP for the year 2016-17 of Rs 121.90 lakh crore, released on 31 May 2017.
The growth in GDP during 2017-18 is estimated at 6.5 percent as compared to the growth rate of 7.1 percent in 2016-17, the CSO said.
The GDP fell in five consecutive quarters before showing a pick-up sign in July-September quarter
The GDP fell in five consecutive quarters before showing a pick-up sign in July-September quarter. In the June quarter, the growth was recorded at a six-quarter-low of 5.7 percent. The RBI too has lowered its estimates on growth for the full fiscal to 6.7 percent, but expects a bounce back in the remaining two quarters at 7 and 7.5 percent, respectively, an opinion which most economists agree with.
Manufacturing growth seen at 4.6 percent as against 7.9 percent last year
For fiscal year 2017-18, the CSO has pegged the manufacturing growth at 4.6 percent as against 7.9 percent last year. The growth for agriculture sector is estimated at 2.1 percent as against 4.9 percent last year. Friday's numbers are lower than RBI's estmate of 6.7 percent. It is also lower than the estimates by most of the economists.
The Central Statistics Office (CSO) on Friday pegged first advance GDP estimate for 2017-18 at 6.5 percent dragged down by lower growth in manufacturing and agriculture sectors. Most of the economists had predicted a lower forecsast.
Real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices in the year 2017-18 is likely to attain a level of Rs 129.85 lakh crore, as against the Provisional Estimate of GDP for the year 2016-17 of Rs 121.90 lakh crore, released on 31st May 2017.
The growth in GDP during 2017-18 is estimated at 6.5 percent as compared to the growth rate of 7.1 per cent in 2016-17, the CSO said.
Last year the government changed the presentation of Union Budget from February-end to 1 February that started the practice of unveiling advance GDP forecast in January. Last year the GDP growth came in at 7.1 percent for the full financial year.
This year the effects of demonetisation and GST are likely to influence the national income numbers in the third quarter. Most of the economist echo the view that the economy will grow at lower levels in the range of 6.5 to 6.7 percent.
7.9℅ GDP growth in 2015-16, 7.1℅ in 2016-17, 6.5℅ is consensus forecast for 2017-18. Secular decline is the inescapable conclusion.
— M K Venu (@mkvenu1) January 3, 2018
Updated Date: Jan 14, 2018 22:52 PM
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