The Indian economy is expected to grow at a slower pace in the current financial year due to weaker growth in the farm sector and in manufacturing.
First advance estimates released by the government’s Central Statistical Organisation peg GDP growth for 2017-18 at 6.5 percent compared to 7.1 percent last year. Growth in gross value added terms, which strips out the impact of indirect taxes and subsidies, is pegged at 6.1 this year, versus a revised 6.6 percent last fiscal.
Meanwhile, the Congress lashed out at the Modi government for the slowdown, asserting how the PM and Finance Minister have ignored economic wisdom, and "dealt a catastrophic blow to India's growth story as proved by the latest GDP estimates".
The first advance estimates released by the CSO are used by the government to prepare the budget for the upcoming financial year. The estimates are prepared using actual sectoral data available for about seven months of the year, along with other indicators such as financial results of the private corporate firms.
The Indian economy has been hit by twin shocks – demonetisation and GST – over the past 14 months. In response, growth in segments like financial services, real estate and manufacturing has turned volatile.
In addition, government spending linked segments like ‘public administration, defence and other services’ also saw a slowdown in the second quarter of fiscal 2018, based on data released by the CSO in November.
GVA growth in the first and second quarters of the year stood at 5.6 percent and 6.1 percent, respectively.
The full-year estimates suggest that the reversal of the slowdown which began in the July-September quarter, gained some pace in the second half of the year.
This is in line with the forecasts put out by the Reserve Bank of India, which expects full-year GVA growth to settle at 6.7 percent this year. Growth in the third and fourth quarters is forecast at 7 percent and 7.8 percent, respectively, RBI executive director Michael Patra said at a press conference on 6 December.
Grim Reality on the Ground: Congress
A statement issued by Randeep Surjewala, Communications in-charge, All India Congress Committee, blamed demonetisation and the implementation of GST for the economy's downturn.
No matter how many manufactured international reports flaunted by the Modi government, the stark truth is that investment has stagnated, job creation is abysmal, exports are in dire straits, stalled projects are burgeoning, inflation remains unchecked and rural distress is at an all-time high. ‘Hype’, ‘Hyperbole’ and ‘Headline Management’ cannot be a substitute to the grim reality on the ground.Congress statement