For the betterment of the Indian economy, new schemes and plans have come up in the previous year. How has it improved the economy?
The Central Statistics Office (CSO) on Friday forecast that GDP growth in the current financial year ending March 31 will slow to a four-year low of 6.5%, from the provisional 7.1% pace seen in 2016-17, dragged down by deceleration in the agriculture and manufacturing sectors.
Gross Value Added (GVA) was also projected to expand by 6.1% in 2017-18, slowing from 6.6% in the preceding fiscal year, according to the first advance estimates of national income for 2017-18, released by the CSO.
The growth in the agriculture, forestry and fishing sector is expected at 2.1% (vs 4.9% growth recorded in 2016-17) while manufacturing is expected to grow at 4.6% (vs 7.9% in 2016-17).
The growth in financial, real estate and professional services sector is expected to accelerate to 7.3%, from 5.7% recorded in 2016-17.
“The GST transition impact is clearly visible,” said Shubhada Rao, chief economist at Yes Bank. Sectors such as manufacturing and hotels were badly hit, she said.
Analysts said despite the lower economic growth, the Reserve Bank of India (RBI) is expected to hold policy rates steady after a recent uptick in retail inflation, which touched 4.88 % in November, its steepest level in 15 months.
“Given the recent uptick in inflation pressure and with inflation likely to remain around 5 % going ahead, we expect the RBI to be on hold with a guarded stance even though growth estimate has disappointed slightly,” Ms. Rao said.
A string of data released this week, however, point to an ongoing economic recovery after economic growth had slowed down to a three-year low in the April-June quarter, on the back of destocking ahead of GST (Goods and Services Tax) implementation and the lingering impact of demonetization.
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Factory activity expanded at the fastest pace in five years in December, a private sector survey showed on Tuesday, buoyed by a rise in output and new orders. Activity in the services industry also bounced back to modest growth in December after contracting in the previous month, a private survey showed on Thursday.
Eight core sectors grew by 6.8% – the highest in 13 months – in November 2017, mainly helped by a robust performance in segments like refinery, steel, and cement, official data showed on Monday.
The growth in construction is reflective of the cement and steel consumption figures recently released by DIPP as part of the core sector figures. The core sector data for November, the latest release so far, showed the steel and cement sectors registering strong double-digit growth.
Growth in the trade, hotels, transport and communication and services related to broadcasting is estimated at 8.7%, quickening from 7.8% in the previous year. Similarly, the financial, insurance, real estate and professional services sector is estimated to expand faster at 7.3% in 2017-18, from 2016-17’s 5.7% pace.
However, the public administration and defense and other services category are expected to grow at 9.4% in 2017-18 compared with 11.3% in 2016-17.
Analysts remain optimistic about economic growth recovering further in 2018-19. “We expect growth to normalize gradually over the next four to six quarters as the disruptive impact of major policy changes fades,” Standard Chartered said in its Economic Outlook report.
Also, aiding the Indian economy will be an expected pick-up in global growth in 2018, say analysts.
The statistics office will release economic growth data for the October-December quarter on February 28, along with revised full-year growth estimates.
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