Indian economy growth estimated to stand at 6.5 percent in 2017-18

GDP forecast at 6.5 per cent Chief Statistician Anant acknowledges GST as one of the factor

GDP forecast at 6.5 per cent Chief Statistician Anant acknowledges GST as one of the factor

The economy grew at 7.1% in 2016-17.

"Implicit calculation suggests H2 FY18 growth will be 7%", chief statistician T C A Anant told a news conference as he presented an analysis of the first advance estimates of national income for 2017-18.

Gross value added (GVA) in agriculture and allied activities is projected to fall to 2.1 per cent in FY18 because of an expected drop in the rabi harvest, an nearly three per cent fall in kharif production, and on account of a big base, according to the first advance estimates of gross domestic product (GDP) for 2017-18 released on Friday. The CSO estimates that the sector will grow by 4.6% in 2017-18 as against a growth of 7.9% previous year. The RBI estimates the economy to grow at 6.7 per cent in terms of gross value added (GVA), which is GDP minus taxes.

India's per capita income will increase by 5.3% to Rs 86,660 in 2017-'18, the office said.

He said that 6.5 per cent for the full year meant that Q3 and Q4 numbers will be far better than first half of the year. But before the GDP figures announced, Finance Ministry officials said slower economic growth was likely to hit revenue collections this year, forcing them to resort to borrow from the market to meet spending targets. Companies have considerably scaled up production and restocked supplies after goods and services tax (GST) kicked in from July 1.

But what is worrying is that finance minister Arun Jaitley had projected a GDP growth of 11.75 per cent at current prices in his budget last February (Rs 168.47 lakh crore). Taken together, India's "real" or inflation-adjusted GDP grew 6 percent in April-September.

This may affect the fiscal deficit, which the government had hoped to cap at Rs 5.46 lakh crore this year.

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"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". Economists said the advance estimates may have been conservative in its assessment.

Despite the poor estimates, the analysts are optimistic about economic growth in 2018-19.

The advance estimates "are not fully factoring in the expected pickup in growth in the later months of FY18, related to a favourable base effect and a "catchup" following the subdued growth momentum in H1 FY18", said Aditi Nayar, principal economist, ICRA.

"Given the tepid growth estimates from agriculture, it gives us a feeling that the budget 2018 will have a higher focus on agriculture and rural economy".

Debroy said that several indicators had already shown signs of improvement, "whether it is the PMI (Purchasing Managersa¿ Index), the high growth in eight core-sector industries or data on vehicle sales".

Moody's Investors Service had raised India's sovereign rating for the first time in over 13 years, saying that growth prospects have improved with continued economic and institutional reforms.

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