However, it is set to moderate to below 7 percent during October-March this year, signaling a slowdown amid festering rural distress.
The Indian economy will likely grow at 7.2 percent in 2018-19, faster than the previous year’s 6.7 percent expansion, but is set to moderate to below 7 percent during October-March this year, signaling a slowdown amid festering rural distress.
According to the first advanced estimates, India's real or inflation-adjusted Gross Domestic Product (GDP) will grow at 7.2 percent in 2018-19, implying an average growth of 6.75 percent between October and March, data released by the Central Statistics Office (CSO) showed on January 7.
India's GDP—the total value of goods and services produced in the country—grew 8.2 percent and 7.1 percent during April-June and July-September quarter respectively in 2018-19.
The government estimated that gross value added (GVA), which is GDP minus net taxes, will grow at 7 percent in 2018-19.
GVA is a more realistic guide to measure changes in the aggregate value of goods and services produced in an economy, compared to last year’s 6.5 percent growth.
According to the estimates, farm sector is set to grow at 3.8 percent against 3.4 percent last year, at constant or inflation-adjusted prices. At current prices, the sector expected to grow at an identical 3.8 percent, which could be emblematic of an agri-commodity price crash across wholesale mandis.
Farm sector slowdown has snowballed into a big political issue ahead of the Lok Sabha elections in April-May. Prices have fallen sharply in many commodities, pummeled by a production glut, forcing many farmers to dump their produce at extremely low prices that hardly covers for their cost.
Many states, including Madhya Pradesh, Chhattisgarh and Rajasthan, where the Congress has recently formed governments upstaging the BJP, have announced loan write offs for farmers to tide over an income crisis.
The GDP advance estimates are crucial as the finance ministry prepares Budget projections for the next financial year based on the statistics office data for 2018-19.
The projections are based on the first advance estimates of crop production information on indicators like sales tax, deposits and credits, passenger and freight earnings of railways, passengers and cargo handled by civil aviation, cargo handled at major sea ports and sales of commercial vehicles available for the first seven months of the financial year.
The second advance estimates to be released on February 28, will based on actual data for three quarters, and the provisional estimate to be released in May, 2019 should give a better picture of the health of the economy.
The CSO projected that the manufacturing sector will grow at 8.3 percent in 2018-19, compared to 5.7 percent, while mining and quarrying will grow at 0.8 percent compared to 2.9 percent last year.
While private final consumption expenditure (PFCE) may grow at 6.4 percent in 2018-19, as compared with 6.6 percent a year ago, gross fixed capital formation (GFCF) - a useful metric to measure corporate investment activity - is expected to increase to 12.2 percent from 7.6 percent in the previous year.
Government final consumption expenditure (GFCE) or government expenditure is expected to grow 9.2 percent in 2018-19 from 10.9 percent a year ago.
The government sounded bullish on the latest GDP estimates."Especially gratifying, impressive and promising is the growth in gross fixed capital formation (GFCF). 12.2 percent real growth in 2018-19 compared to 7.6 percent in in 2017-18 heralds excellent pick up in investment activity. GFCF as a ratio to GDP has risen to 32.9 percent from 31.4 percent in 2017-18," economic affairs secretary Subhash Chandra Garg tweeted.