Full text: Govt estimates show India's FY18 GDP growth slowing down to 6.5%

Govt expected economic growth to slow down to 6.5% in the financial year ending in March

The government on Friday said it expected economic growth to slow down to 6.5% in the financial year ending in March from 7.1% a year earlier.

Most private economists have pared India's growth forecast to 6.2% to 6.5% for the 2017-18 financial year, citing the impact of the chaotic launch of Goods and Services Tax (GST) in July on business activities.

Here the full text of first advance estimates of National Income for FY18:
 
FIRST ADVANCE ESTIMATES OF NATIONAL INCOME, 2017-18

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has released the First Advance estimates of national income at constant (2011-12) and current prices, for the financial year 2017-18. These are presented in Statements 1-4.

2. The First Advance Estimates of GDP have been released in accordance with the release calendar of National Accounts@. The approach for compiling the advance estimates is based on benchmark-indicator method. The Sector-wise estimates are obtained by extrapolation of indicators like (i) Index of Industrial Production of first 7 months of the financial year, (ii) financial performance of listed companies in the private corporate sector available upto quarter ending September, 2017 (iii) 1st advance estimates of crop production, (iv) accounts of Central & State Governments, information on indicators like deposits & 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 8 months of the financial year. With the introduction of Goods and Services Tax (GST) from 1st July 2017 and consequent changes in the tax structure, the total tax revenue used for GDP compilation include non-GST revenue and GST revenue. For the year 2017-18, the Budget estimates of tax revenue as provided by Controller General of Accounts (CGA) has been used for estimating taxes on products at current prices. For compiling taxes on products at constant prices, volume extrapolation is done using volume growth of taxed goods and services and aggregated to get the total volume of taxes. Annual forecast of indicators which are available for first 7/8 months is based on regression using seasonal dummies to account for seasonal fluctuations. Some indicators like IIP has been compiled by dividing the cumulative value for the first 7 months of the current financial year by average of ratio of cumulative value of 7 months to the annual value of past years. The salient features of the estimates are detailed below:
 
A. ESTIMATES AT CONSTANT (2011-12) PRICES

Gross Domestic Product
3. 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 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.
 
Gross Value Added (GVA) at Basic Prices
 
4. Real GVA, i.e, GVA at basic constant prices (2011-12) is anticipated to increase from Rs 111.85 lakh crore in 2016-17 to Rs 118.71 lakh crore in 2017-18. Anticipated growth of real GVA at basic prices in 2017-18 is 6.1 percent as against 6.6 percent in 2016-17.
 
5. The sectors which registered growth rate of over 7.0 percent are, 'public administration, defence and other services’, ‘Trade, hotels, transport, communication and services related to broadcasting’, ‘electricity, gas, water supply and other utility services’ and 'financial, real estate and professional services'. The growth in the ‘agriculture, forestry and fishing’, ‘mining and quarrying’, ‘manufacturing’, and ‘construction’ is estimated to be 2.1 per cent, 2.9 per cent, 4.6 percent and 3.6 percent respectively.
 
Agriculture, forestry and fishing
6. The ‘agriculture, forestry and fishing’ sector is likely to show a growth of 2.1 per cent 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. According to the information furnished by the Department of Agriculture and Cooperation (DAC), the production of food grains during the Kharif season of agriculture year 2017-18 was 134.67 million tonnes as compared to 138.52 million tonnes during the same period in 2016-17. In case of livestock sector, estimates of production, mainly in the form of production targets for milk, egg, meat and wool from the Department of Animal Husbandry, Ministry of Agriculture has been used.

Mining and quarrying
7. GVA at basic prices for 2017-18 from ‘mining and quarrying’ sector is estimated to grow by 2.9 percent as compared to growth of 1.8 percent in 2016-17. The key indicators of mining sector, namely, production of coal, crude oil and natural gas registered growth rates of 1.5 per cent, (-)0.2 percent and 3.7 percent respectively during April-November, 2017-18. Annual forecast of production estimated in respect of these items have been used to extrapolate the Provisional Estimates of value of output of coal, crude petroleum, and other major and minor minerals, respectively. IIP of mining registered growth rate of 3.4 percent during April-October, 2017-18. The advance estimate of IIP of Mining compiled for the current year has been used for compilation. The private corporate sector growth in the mining sector for 2017-18 is estimated using the information available on the performance of major listed companies during the first half of financial year 2017-18.
 
Manufacturing
8. 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. The quasi corporate and unorganized segment (which include individual proprietorship and partnerships and khadi & village Industries has a share of around 21 percent in the manufacturing sector) has been estimated using IIP of manufacturing. The advance estimates of IIP for the current year at 2-digit level is used to extrapolate the previous year’s value added estimates at 2-digit level, separately for the quasi corporate and household sectors. IIP manufacturing registered growth of 2.1 percent during April-October, 2017-18. The Wholesale Price Index (WPI), in respect of the manufactured products registered a growth of 2.6 percent during April-November, 2017-18.
 
Electricity, gas, water supply and other utility services
 
9. GVA at basic prices for 2017-18 from ‘Electricity, Gas, water supply and other utility services’ sector is expected to grow by 7.5 percent as compared to growth of 7.2 percent in 2016- 17. Advance Estimate of IIP of Electricity compiled for 2017-18 has been used for compilation. IIP of Electricity registered a growth rate of 5.3 percent during April-October, 2017-18.
 
Construction
 
10. GVA at basic prices for 2017-18 from ‘Construction’ sector is expected to grow by 3.6 percent as compared to growth of 1.7 percent in 2016-17. Key indicators of construction sector, namely, production of cement and consumption of finished steel registered growth rates of 0.6 percent and 4.2 percent respectively during April-November, 2017-18.
 
Trade, hotels and transport & communication and services related to broadcasting
 
11. The estimated growth in GVA for the trade, hotels, transport and communication and services related to broadcasting services during 2017-18 is placed at 8.7 per cent as against growth of 7.8 percent in the previous year. GVA from Trade sector is estimated using an index of turnover based on Sales tax. With introduction of GST, sales tax data is now subsumed under GST. Therefore, a comparable estimate of turnover based on sales tax has been estimated. Methodology of estimation is as explained in the Annexure to the press note on estimates of GDP for the second quarter (July-September) of 2017-18 released on 30th November, 2017. Among the other services sectors, the key indicators of railways, namely, the net tonne kilometres and passenger kilometres have shown growth rate of 4.8 percent and 3.2 percent respectively during April-November 2017- 18. Cargo handled at major sea ports registered growth of 3.5 percent during April-November, 2017-18. Passengers and cargo handled by civil aviation increased by 15.1 percent and 18.2 percent respectively during April- November, 2017-18. Sales of commercial vehicles registered growth of 10.6 percent during April-November, 2017-18.
 
Financial, insurance, real estate and professional services
 
12. The estimated growth in GVA for this sector during 2017-18 is placed at 7.3 percent as compared to growth of 5.7 percent in 2016-17. The key indicators of this sector are the growth of corporate sector for real estate sector and computer related activities which are estimated using latest available information on listed companies for the first half of financial year 2017-18. The combined growth in aggregate bank deposits and credits as on 10 November 2017 was 8.4 per cent.
 
Public administration and defence and other services
 
13. GVA at basic prices for 2017-18 from this sector is expected to grow by 9.4 percent as compared to growth of 11.3 percent in 2016-17. The key indicator of this sector namely, Union Government expenditure net of interest payments and subsidies grew by 14.6 percent during AprilNovember 2017-18.
 
Per Capita Income
 
14. The per capita income in real terms (at 2011-12 prices) during 2017-18 is likely to attain a level of Rs 86660 as compared to Rs 82269 for the year 2016-17. The growth rate in per capita income is estimated at 5.3 per cent during 2017-18, as against 5.7 per cent in the previous year.
 
B. ESTIMATES AT CURRENT PRICES
 
15. Price indices used as deflators
 
The wholesale price index (WPI), in respect of the groups - food articles, manufactured products, electricity and all commodities, has risen by 2.0per cent, 2.6 per cent, 0.4 percent and 2.8 percent, respectively during April-November 2017-18. The Consumer Price Index(CPI) has shown a rise of 3.0 per cent during April-November, 2017-18.
 
Gross Domestic Product
16. GDP is derived by adding taxes on products net of subsidies on products to GVA at basic prices. GDP at current prices in the year 2017-18 is likely to attain a level of Rs 166.28 lakh crore, as against Rs 151.84 lakh crore in 2016-17 showing a growth rate of 9.5 per cent.
 
National Income
 
17. The nominal Net National Income (NNI), also known as national income (at current prices) is likely to be Rs 147.11 lakh crore during 2017-18, as against Rs 134.08 lakh crore for the year 2016- 17. In terms of growth rates, the national income registered a growth rate of 9.7 per cent in 2017- 18 as against the previous year’s growth rate of 11.0 per cent.
 
Per Capita Income
 
18. The per capita net national income during 2017-18 is estimated to be Rs 111,782 showing a rise of 8.3 per cent as compared to Rs 103,219 during 2016-17 with the growth rate of 9.7 percent.
 
C. ANNUAL ESTIMATES OF FINAL EXPENDITURES OF GDP, 2017-18
 
19. Along with the First Advance Estimates of GVA at basic prices by economic activity, the First Advance Estimates of expenditures of the GDP at current and constant (2011-12) prices are also released. These estimates have been compiled using the data from the same sources as those used for compiling GVA estimates by economic activity, detailed data available on merchandise trade in respect of imports and exports, balance of payments, and expenditure of Central and State Government. As various components of expenditure on gross domestic product, namely, consumption expenditure and capital formation, are normally measured at market prices, the discussion in the following paragraphs is in terms of market prices only.
 
Private Final Consumption Expenditure
 
20. Private Final Consumption Expenditure (PFCE) at current prices is estimated at Rs 97.75 lakh 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 68.07 lakh 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 per cent and 55.8 per cent, respectively in 2016-17.
 
Government Final Consumption Expenditure
 
21. 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 during 2017-18 are estimated at 11.9 per cent and 11.2 per cent, respectively, as against the corresponding rates of 11.7 per cent and 11.0 per cent, respectively in 2016-17.
 
Gross Fixed Capital Formation
 
22. 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 per cent and 29.0 per cent, respectively, as against the corresponding rates of 27.1 per cent and 29.5 per cent, 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.
 
23. Estimates of Gross/Net National Income and Per Capita Income along with GVA at basic prices by kind of economic activity and the Expenditures of GDP for the years 2015-16, 2016-17 and 2017-18, at constant (2011-12) and current prices are given in Statements 1 to 4.
 
24. The release of Second Advance Estimates of national income for the year 2017-18 and quarterly GDP estimate for the third quarter (October-December), 2017-18 (Q3 of 2017-18) will be on 28.02.2018.