Overestimation bias likely in GDP advance estimate: Crisil

Momeycontrol BureauCrisil Research sees advance gross domestic product (GDP) estimates released by the Central Statistics Office (CSO) Friday having an upward bias especially in terms of government consumption growth (23.8 percent) and government services growth (12.8 percent). Agriculture and industrial sector growth estimates are, however, in line with their forecasts, a report by the rating agency says.According to government data, the Indian economy will likely grow at 7.1 percent in 2016-17, 0.5 percentage points slower than the previous year’s 7.6 percent expansion. However, Crisil estimates growth at 6.9 percent in fiscal 2017.The ratings agency also believes that the note ban pain will not ease out in many sectors, especially sectors dealing in high value cash transactions such as real estate (and thereby related sectors such as cement and other building products), and luxury automobiles. The 2018 outlook though, the report says, will be shaped by how long the cash crunch disruption lasts. As a base case, Crisil expects normalisation after a 2-quarter blip and expect growth to start nearing 8 percent in the next fiscal provided monsoons remain normal.