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CSO pegs GDP growth at four year low of 6.5% in 2017-18. Jaitley’s estimate was 7.5%

Neeraj Thakur | Updated on: 6 January 2018, 3:07 IST

India's Gross Domestic Product (GDP) growth estimate has been lowered to 6.5% for 2017-18, as against finance minister Arun Jaitley's estimate of 7.5% announced in the beginning of the financial year. In 2016-17, India's GDP grew by 7.1%.

In its first advance estimate for the full financial year, the Central Statistics Office estimated India's real GDP at constant prices (2011-12) in the year 2017-18 to be Rs 129.85 lakh crore, as against the Provisional Estimate of GDP for the year 2016-17 of Rs 121.90 lakh crore.

In the last week of December 2017, finance ministry had announced that the government will be borrowing an additional amount of Rs 50,000 crore from markets by issuing G-Sec bonds to meet its expenditure. This means that India's fiscal deficit is likely to be higher than budgetary estimate 3.2% for fiscal 2017-18.

CSO estimates suggest that in the current fiscal, the (Gross Value Added) growth in agriculture, forestry and fishing sector is set to decline to 2.1% as against the previous year’s growth rate of 4.9%.

The estimates are based on first advance estimates of production of major kharif crops for 2017-18 and targets based on rabi sowings.

The disruption introduced by the implementation of Goods and Services Tax is expected to take a major toll on the sector. The CSO estimates that the sector will grow by 4.6% in 2017-18 as against a growth of 7.9% last year.

Electricity, gas, water supply& other utility services are likely to grow marginally in the current fiscal at 7.5% as against 7.2% last year

Financial, real estate & professional services will grow by 7.3% in 2017-18 as against 5.7% previous year.

The construction sector will grow at 3.6% in 2017-18 as against 1.7% in 2016-17.

Fall in private investments as a percentage of GDP

A key problem in India's GDP growth over the past few years has been a constant decline in private sector expenditure in the Indian economy. The latest estimates for full year suggest there is no change in trend. Gross Fixed Capital Formation (GFCF), a proxy for private investment in the country is set to be 29% of the GDP in 2017-18 as against 29.5% in 2016-17. In 2015-16, the GFCF was at 30.9%.

 

First published: 6 January 2018, 3:07 IST
 
Neeraj Thakur @neerajthakur2

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