Economy set for slowdown as govt pegs growth for FY18 at 6.5%

Economy set for slowdown as govt pegs growth for FY18 at 6.5%

This is the slowest pace of growth in the country's economy in the last four years.

Commenting on the CSO estimates, Economic Affairs Secretary Subhash Chandra Garg said GDP growth forecast of 6.5 per cent for 2017-18 implies growth of 7 per cent for the second half of the fiscal.

But defending the government, Bibek Debroy, Chairman, Economic Advisory Council to the Prime Minister (EAC-PM) has said on Saturday, "India's advance GDP growth estimate of 6.5 per cent for this fiscal shows reform measures taken by the government is yielding results and growth will accelerate to over 7 per cent in 2018-19".

Private consumption: While growth in private consumption is expected to slow to 6.3% in FY18, investment demand growth is estimated to quicken to 4.5% during the same year.

"For FY18 as a whole, we continue to expect GVA and GDP growth to print at 6.5 per cent and 6.7 percent, respectively, higher than the advance estimates of 6.1 per cent and 6.5 per cent", said Aditi Nayar, principal economist at ICRA.

Ahead of the GDP advance estimate numbers, India benchmark equity indices closed at record closing highs, posting their fifth consecutive weekly gain, as financials and metal stocks rose tracking global markets on strong economic data. The farm sector is set to grow at 2.1 percent against 4.9 percent last year while mining and quarrying will grow at 2.9 percent compared to 1.8 percent last year.

Gross Value Added: The GVA growth is expected to fall to 6.1%, much lower than the 6.7% growth projected by Reserve Bank of India in its latest bi-monthly monetary policy review on 6 December.

The growth rate of the agriculture, fishing and forestry sector is expected to decline from 4.9% in 2016-'17 to 2.1% in 2017-'18. At the time of releasing the second quarter GDP data in November, Anant had said: "GST has brought in a number of uncertainties because of tax for the period not being paid on time".

The first advance estimates show nominal GDP at Rs 166.3 lakh crore, a 9.5% increase over a year ago.

The Indian economy expanded at 7.1 per cent in 2016-17, recording the fastest growth across the globe. "Assuming that budgetary targets will be met, which gave a fiscal deficit of 3.24 per cent, our figures estimate it to be at 3.29 per cent, which rounding off becomes 3.3 per cent", he said.

The government's statistics wing will have data only for additional one or two months than what it had for its second quarter (July-September) GDP estimate to make the full-year GDP growth projection.