FY17 GDP growth at 7.1%; Modi government revises FY17 nominal GDP growth to 10.8%

The Indian economy grew at 7.1 percent in 2016-17, as compared with 8.1 percent a year ago, according to first revised estimates of GDP released by Central Statistics Office.

The provisional estimate of Gross Domestic Product (GDP) for 2016-17 was released by the government on May 31, 2017, which showed real or inflation-adjusted GDP growth at 7.1 percent and nominal GDP growth at 11 percent.

However, latest numbers show that the nominal GDP (at current prices for the year 2016-17) growth has declined to 10.8 percent from 11 percent.

In India, real GDP is considered to divulge the true growth picture of the economy. Real or inflation-adjusted GDP is usually calculated by subtracting the growth in actual or nominal GDP by the inflation rate or “price deflators.”

Indian economy grew at its fastest pace since 2011 to reach 8 percent growth during 2015-16. However, many analysts attributed the dip in growth figures to a sudden currency recall exercise in November, 2016 that forced a slide in household spending and corporate investment caused by the sudden flush out of high-value notes and restricted cash access.

The statistics office provisional estimates showed that Gross Value Added (GVA) grew 7.1 percent in 2016-17. It was 6.6% earlier.

GVA, which is GDP minus taxes, serves as a more realistic proxy to measure changes in the aggregate value of goods and services produced in the economy.

The current set of data has been compiled using industry-wise detailed information instead of using the benchmark-indicator method employed at the time of release of provisional estimates last year.

“The estimates of GDP and other aggregates for the years 2014-15and 2015-16 have undergone revision due to use of latest available data on agricultural production; industrial production especially those based on the provisional results of Annual Survey of Industries (ASI): 2015-16 and final results of ASI: 2014-15; government expenditure (replacing Revised Estimates with Actuals for the year 2015-16) and also more comprehensive data available from various source agencies and State/UT Directorates of Economics and Statistics,” the statistics office said.

According to the new estimates India’s real GDP grew 6.1 percent, 7.2 percent and 8.1 percent in 2013-14, 2014-15 and 2015-16 respectively from 6.4 percent, 7.5 percent and 8.0 percent.