GDP first advance estimate: CSO pegs FY20 growth at 5%, lowest in 11 years

The government has pegged economic growth rate for 2019-20 at 5  percent, slower than the 2018-19 expansion rate of 6.8 percent.

At 5 percent, the growth would be at an 11-year low, CNBC-TV18 reported.

India's GDP — the total value of goods and services produced in the country — slumped to over 6-year low of 5 percent in the April -June quarter and 4.5 percent in the July - September quarter of 2019.

The government estimated that gross value added (GVA), which is GDP minus net taxes, will grow at 4.9 percent in 2019-20.

GVA is a more realistic guide to measure changes in the aggregate value of goods and services produced in an economy.

According to the estimates, farm sector is set to grow at 2.8 percent against 2.9 percent last year, at constant or inflation-adjusted prices.

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 be based on actual data for three quarters, and the provisional estimate to be released in May, should give a better picture of the health of the economy.

The CSO projected that the manufacturing sector will grow at 2 percent in 2019-20 against 6.9 percent in 2018-19, while mining and quarrying will grow at 1.5 percent against 1.3 percent last year.

While private final consumption expenditure (PFCE) may grow at 5.8  percent against 8.1 percent in FY19 while gross fixed capital formation (GFCF) - a useful metric to measure corporate investment activity - is expected to come in at 1 percent against 10 percent in the previous year.

Government final consumption expenditure (GFCE) or government expenditure is expected to grow at 10.5 percent in 2019-20 against 9.2 percent a year ago.