Centre revises FY18 GDP growth rate to 7.2% from 6.7%

India Economy

The Indian economy grew at 7.2 percent in 2017-18, as compared to earlier estimates of 6.7 percent, according to first revised estimates of GDP released by the central statistics office.

The provisional estimate of gross domestic product (GDP) for 2017-18 was released by the Centre on May 31, 2018, which showed real or inflation-adjusted GDP growth at 6.7 percent.

The revised GDP data indicates that the impact of demonetisation on India’s growth wasn’t as severe as it was expected, which would be a shot in the arm for the Narendra Modi-led government ahead of the cruicial Lok Sabha elections in April-May.

Nominal GDP or GDP at current prices for 2017-18 has been revised to 11.3 percent from 10.0 percent, data showed.

Real GDP growth rate has been revised to 8.2 percent from 7.1 percent for 2016-17, while nominal GDP has been revised upwards to 11.5 percent from 10.8 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”.

The 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 or demonetisation 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 6.9 percent in 2017-18, driven by higher primary sector growth. It was 6.5 percent 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 First Revised Estimates for 2017-18 have been compiled using industry-wise/institutionwise detailed information instead of using the benchmark-indicator method employed at the time of release of Provisional Estimates on 31st May, 2018. The estimates of GDP and other aggregates for 2015-16 and 2016-17 have undergone revision on account of use of latest available data on agricultural production; industrial production; government expenditure (replacing Revised Estimates with Actual for 2016-17) and also more comprehensive data available from various source agencies like MCA,NABARD etc. and State/UT Directorates of Economics and Statistics,” the statistics office said.

According to the new estimates India’s real GDP grew 6.4 percent, 7.4 percent and 8.0 percent in 2013-14, 2014-15 and 2015-16 respectively from 6.1 percent, 7.1 percent and 8.1 percent.