GDP likely to grow by 6.5% this fiscal

GDP expected to grow at 6.5% in FY18 slower than 7.1% in FY17

Earlier, the country's GDP growth for the second quarter of the current fiscal that ended on September 30 was 6.3 per cent - up from 5.7 per cent reported during the first quarter of 2017-18.

The CSO's GVA full-year growth estimate of 6.1%, compares with a 6.7% pace that the Reserve Bank of India had forecast at its December policy meeting.

The nominal GDP will be used as the benchmark for most indices in the forthcoming Union Budget to be presented on February 1. In a fiscally tight year, a lesser nominal GDP will make it that more hard for the government to achieve the fiscal deficit target of 3.2% of GDP in 2017-18.

The economy is expected to grow at a four-year low of 6.5 per cent this fiscal, according to the first advance estimate of national income released by the Central Statistics Office on Friday.

India's economic growth is estimated to slow down to 4-year low of 6.5 per cent this fiscal, the lowest under the NDA regime, mainly due to GST impact on manufacturing and subdued farm output. The income approach, which is sometimes referred to as GDP (I), is calculated by adding up total compensation to employees, gross profits for incorporated and non incorporated firms, and taxes less any subsidies. "It is not unusual growth in agriculture in a good year".

In the second quarter, the economy showed signs of revival as the GDP growth rate picked up and stood at 6.3 per cent.

As per the data, the Gross Value Added (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. Most of the economist echo the view that the economy will grow at lower levels in the range of 6.5 to 6.7 percent.

The data disclosed that sectors like "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" registered a growth rate of over 7 percent.

The GST collection council had cut rates for over 200 items in October and November, which might impact collections.

The usefulness of advance estimates is that they help the finance ministry in making Budget projections for the next financial year. A year ago this sector had growth at 5.7%.

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