India’s economic growth slowed marginally to 7% in October-December (2016-17) from 7·4% in Q2, in CSO’s estimate released on February 28, 2017. The data surprised many, including the experts and economists. The Central Statistics Office (CSO) also retained the advanced estimate for 2016-17 at 7·1%, which is lower than 7·9% of 2015-16, but higher than what most economists have predicted in view of the crippling effect that demonetisation has had on consumption and investment. The Q3 GDP growth estimate beat analysts’ expectation of 6·4%. Some had even projected the growth to slip below 6%. Analysts point to flaws in the GDP calculations saying it does not factor in the informal sector, which was the worst hit after the government scrapped 500 and 1,000 notes in a surprise announcement on November 8, 2016.
What has also driven the GDP growth is agriculture sector that grew 6% during October-December as compared to a 2·2% fall in the same quarter of last year and 3·8% in July-September (2016-17). During Q3 (2016-17), mining and quarrying grew by 7·5%, electricity 6·8% and construction 2·7%. Among the services sector, the trade, hotels, transport and communication grew by 7·2% while financial sector grew 3·1% and public services 11·9%.
It is worth mentioning here that India’s GDP grew by 7·1% in April-June (2016-17) and 7·3% in July-September (2016-17), making Indian economy among the fastest growing major economies of the world. Eco-nomic Survey 2016-17 lowered economic growth to as low as 6·5% in 2016-17 from 7·9% in 2015-16. How-ever, the Economic Survey : 2016-17 expected that the growth was to rebound to 6·75-7·50% in 2017-18.
GDP growth rates for 2016-17 and Q1, Q2, Q3 of 2016-17 at constant (2011-12) and current prices are given below :
|
Growth Rates of GDP |
||
| Constant prices (2011-12) | Current prices | |
| Annual 2016-17 (Second advance) | 7·1 | 11·5 |
| Q1 2016-17 (April-June) | 7·2 | 10·8 |
| Q2 2016-17 (July-Sept.) | 7·4 | 11·8 |
| Q3 2016-17 (Oct.-Dec.) | 7·0 | 10·6 |
IInd Advanced Estimates for 2016-17
Key indicators of national income for 2016-17 are given below :
- Real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices in the year 2016-17 is likely to attain a level of 121·65 lakh crore, as against the First Revised Estimate of GDP for the year 2015-16 of 113·58 lakh crore. The growth in GDP during 2016-17 is esti-mated at 7·1 per cent as compared to the growth rate of 7·9 per cent in 2015-16.
- Real Gross Value Added, i.e, GVA at basic constant prices (2011-12) is anticipated to increase from 104·70 lakh crore in 2015-16 to 111·68 lakh crore in 2016-17. Anticipated growth of real GVA at basic prices in 2016-17 is 6·7 per cent against 7·8 per cent in 2015-16.
- The sectors which are likely to register growth rate of over 7·0 per cent are ‘public administration, defence and other services’, ‘manufacturing’ and ‘trade, hotels, transport, communication and services related to broadcasting’. The growth in the ‘agriculture, forestry and fishing’, ‘mining and quarrying’, ‘electricity, gas, water supply and other utility services’, ‘construction’ and ‘financial, real estate and professional services’ is estimated to be 4·4 per cent, 1·3 per cent, 6·6 per cent, 3·1 per cent and 6·5 per cent respectively.
- The per capita income in real terms (at 2011-12 prices) during 2016-17 is likely to attain a level of 82,112 as compared to 77,524 for the year 2015-16. The growth rate in per capita income is estimated at 5·9 per cent during 2016-17, as against 6·6 per cent in the previous year.
- GDP is derived by adding taxes on products net of subsidies on products to GVA at basic prices. GDP at current prices in the year 2016-17 is likely to attain a level of 152·51 lakh crore, as against 136·75 lakh crore in 2015-16 showing a growth rate of 11·5 per cent.
- The Economic Survey 2015-16 had predicted the Indian economy to register the GDP growth
| Second Advance Estimates of GVA at Basic Price by Economic Activity
(At 2011-12 prices) ( crore) |
||||
|
Industry |
2015-16 | 2016-17 | Percentage change over previous year | |
| (1st RE) | (2nd AE) | 2015-16 | 2016-17 | |
| 1. Agriculture, forestry& fishing | 16,16,461 | 16,87,064 | 0·8 | 4·4 |
| 2. Mining & quarrying | 3,44,972 | 3,49,351 | 12·3 | 1·3 |
| 3. Manufacturing | 18,63,835 | 20,07,564 | 10·6 | 7·7 |
| 4. Electricity, gas, water supply & other utility services | 2,24,323 | 2,39,203 | 5·1 | 6·6 |
| 5. Construction | 8,52,821 | 8,79,525 | 2·8 | 3·1 |
| 6. Trade, hotels, transport, communication and services related to broadcasting | 19,88,512 | 21,33,851 | 10·7 | 7·3 |
| 7. Financial, real estate & professional services | 22,94,193 | 24,43,633 | 10·8 | 6·5 |
| 8. Public administration, defence and other services | 12,84,603 | 14,28,124 | 6·9 | 11·2 |
| GVA at Basic Price | 1,04,69,720 | 1,11,68,315 | 7·8 | 6·7 |
| Second Advance Estimates of GVA at Basic Price by Economic Activity
(At current prices) ( crore) |
||||
|
Industry |
2015-16 | 2016-17 | Percentage change over previous year | |
| (1st RE) | (2nd AE) | 2015-16 | 2016-17 | |
| 1. Agriculture, forestry& fishing | 21,72,910 | 23,82,289 | 5·1 | 9·6 |
| 2. Mining & quarrying | 2,96,041 | 3,09,178 | – 5·7 | 4·4 |
| 3. Manufacturing | 20,65,093 | 22,78,149 | 9·6 | 10·3 |
| 4. Electricity, gas, water supply & other utility services | 3,21,765 | 3,38,396 | 15·1 | 5·2 |
| 5. Construction | 10,00,459 | 10,64,068 | 2·3 | 6·4 |
| 6. Trade, hotels, transport, communication and services related to broadcasting | 22,94,367 | 25,38,162 | 9·5 | 10·6 |
| 7. Financial, real estate & professional services | 26,32,432 | 28,96,300 | 11·4 | 10·0 |
| 8. Public administration, defence and other services | 16,68,871 | 19,44,243 | 12·1 | 16·5 |
| GVA at Basic Price | 1,24,51,938 | 1,37,50,786 | 8·6 | 10·4 |
| RE : Revised Estimates, AE : Advance Estimates. | ||||
rate in the range of 7 to 7·75 per cent in the year 2016-17. The economy was indeed treading along that path and clocked 7·2 per cent in the first half of 2016-17.
- As per the first advance estimates of the CSO, growth rate of the services sector is projected to grow at 8·8 per cent in 2016-17, almost the same as in 2015-16.
- The nominal Net National Income (NNI), also known as national income (at current prices) is likely to be 134·86 lakh crore during 2016-17, as against 120·83 lakh crore for the year 2015-16. In terms of growth rates, the national income registered a growth rate of 11·6 per cent in 2016-17 as against the previous year’s growth rate of 10·2 per cent.
- The per capita net national income during 2016-17 is esti-mated to be 1,03,818 showing a rise of 10·2 per cent as com-pared to 94,178 during 2015-16 with the growth rate of 8·9 per cent.
- India’s economic growth decelerated to its slowest level in six quarters in the April-June period of current financial year 2016-17 against government’s target of achieving 8% growth this year. However, an imminent boost from the agriculture sector on account of a normal monsoon after two consecutive drought years and a push to urban consumption from the pay hike to central government employees are expected to significantly push economic growth in the rema-ining quarters of 2016-17.
- Data released by the Central Statistics Office (CSO) showed Gross Domestic Product (GDP) grew 7.1% in the first quarter of the fiscal year, against 7.9% in the preceding three months i.e. the fourth quarter of 2015-16. During the June quarter last fiscal 2015-16, GDP growth was estimated at 7.5%.
- The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has released the estimates of Gross Domestic Product (GDP) for the First Quarter (April-June) Q1, of 2016-17, both at constant (2011-12) and current prices, along with the corresponding quarterly estimates of expenditure components of the GDP. As per data released by the Central Statistics Office (CSO), GDP growth (measured in terms of constant 2011-12 market prices) for the First Quarter (Q1) of 2016-17 is estimated to be 7.1 per cent as against 7.5 per cent for Q1 of 2015-16. Growth of GDP for the full year 2015-16 was estimated to be 7.6 per cent.
- The growth in agriculture and allied sectors is estimated at 1.8 per cent in Q1 2016-17, as against 2.6 per cent in Q1 2015-16. According to the released data, the manufacturing has registered a good recovery where the growth increased from 7.3 per cent in Q1 2015-16 to 9.1 per cent in Q1 2016-17. But, on account of the slackness in mining and quarrying (contraction of 0.4 per cent in Q1 2016-17) and in construction activity (growth of only 1.5 per cent), the overall industrial growth declined from 6.7 per cent in Q1 2015-16 to 6.0 per cent in Q1 of 2016-17.
- The growth in services increased from 8.8 per cent in Q1 2015-16 to 9.6 per cent in Q1 2016-17. The official sources state that the major change contributing to this increase in growth is the substantial increase in the growth of public administration, defence and other services from 5.9 per cent in Q1 2015-16 to 12.3 per cent in Q1 2016-17. The growth in financial, insurance, real estate and professional services also remained strong during the first quarter of the year 2016-17.
- The lower growth in Q1 of 2016-17, compared to Q1 of 2015-16 is attributable to increase in subsidies by 53 per cent which has resulted in lower growth of net indirect taxes. It is also due to the negative growth in gross fixed capital formation. GFCF growth at constant prices declined from 7.1 per cent in Q1 of 2015-16 to (-) 3.1 per cent in Q1 2016-17. The ratio of fixed capital formation (which is also called fixed investment) to GDP at current prices declined from 31.6 per cent in Q1 2015-16 to 28.3 per cent in Q1 2016-17.
- According to official sources, the growth in governmental final consumption expenditure, in real terms, increased to 18.8 per cent in Q1 2016-17 from (-) 0.2 per cent in Q1 2015-16. The growth of private final consumption (major component of GDP) has remained more or less the same (6.7 per cent in Q1 2016-17 as against 6.9 per cent in Q1 2015-16, in real terms). The data also reveal that there has been an improvement in the growth of export of goods and services from (-) 5.7 per cent in Q1 2015-16 to 3.2 per cent in Q1 2016-17, as well as, a reduction in the growth of imports from (-) 2.4 per cent in Q1 2015-16 to (-) 5.8 per cent in Q1 2016-17.
- Growth of GVA at basic prices increased marginally from 7.2 per cent in Q1 2015-16 to 7.3 per cent in Q1 of 2016-17. GVA growth is higher than the GDP growth because the growth in net indirect taxes declined from 11.9 per cent in Q1 2015-16 to 3.6 per cent in Q1 2016-17.
The salient features of provisional estimates of the year 2015-16 are as follows :
(a) Estimates at Constant (2011-12) Prices
(i) Real GDP or GDP at constant (2011-12) prices for the year
|
Growth Rates of GDP |
||
| Constant Prices (2011-12) | Current Prices | |
| Annual 2015 -16 | 7·6 | 8.7 |
| Q1 2015-16 (April-June) | 7·5 | 8·8 |
| Q2 2015-16 (July-September) | 7·6 | 6·4 |
| Q3 2015-16 (October-December) | 7·2 | 9·1 |
| Q4 2015-16 (January-March) | 7·9 | 10·4 |
|
Provisional Estimates of GVA by Economic Activity |
||||
|
Industry |
Percentage Change Over Previous Year (At Current Price) |
Percentage Change Over Previous Year (At Basic Price) |
||
| 2014-15 | 2015-16 | 2014-15 | 2015-16 | |
| 1. Agriculture, forestry & fishing | 4·9 | 4·9 | – 0·2 | 1·2 |
| 2. Mining & quarrying | 2·8 | 4·7 | 10·8 | 7·4 |
| 3. Manufacturing | 7·6 | 8·1 | 5·5 | 9·3 |
| 4. Electricity, gas, water supply & other utility services | 12·9 | 10·8 | 8·0 | 6·6 |
| 5. Construction | 7·8 | 1·3 | 4·4 | 3·9 |
| 6. Trade, hotels, transport, communication and services related to broadcasting | 13·3 | 6·6 | 9·8 | 9·0 |
| 7. Financial, real estate & professional services | 13·3 | 7·4 | 10·6 | 10·3 |
| 8. Public Administration, defence and other services | 17·3 | 12·1 | 10·7 | 6·6 |
| GVA at Basic Price | 10·5 | 7·0 | 7·1 | 7·2 |
| NS: New Series Estimates; RE: Revised Estimates; PE: Provisional Estimates | ||||
2015-16 is estimated at 113·50 lakh crore, showing a growth rate of 7·6 per cent over the First Revised Estimates of GDP for the year 2014-15 of 105·52 lakh crore.
(ii) Real GVA, i.e., GVA at basic constant (2011-12) prices for the year 2015-16 is estimated at 104·27 lakh crore, showing a growth rate of 7·2 per cent over the First Revised Estimates of GVA for the year 2014-15 of 97·27 lakh crore.
(iii) The Gross National Income (GNI) at 2011-12 prices is estimated at 112·13 lakh crore during 2015-16, as against the previous year’s First Revised Estimate of 104·28 lakh crore. In terms of growth rates, the gross national income is estimated to have risen by 7·5 per cent during 2015-16, in comparison to the growth rate of 7·3 per cent in 2014-15.
(iv) The per capita income in real terms (at 2011-12 prices) during 2015-16 is likely to attain a level of 77435 as compared to 72,889 for the year 2014-15. The growth rate in per capita income is estimated at 6·2 per cent during 2015-16, as against 5·8 per cent in the previous year.
(b) Estimates at Current Prices
(i) GDP at current prices for the year 2015-16 is estimated at 135·76 lakh crore, showing a growth rate of 8·7 per cent over the First Revised Estimates of GDP for the year 2014-15 of 124·88 lakh crore.
(ii) The GNI at current prices is estimated at 134·19 lakh crore during 2015-16, as compared to 123·41 lakh crore during 2014-15, showing a rise of 8·7 per cent.
(iii) The per capita income at current prices during 2015-16 is estimated to have attained a level of 93,293 as compared to the First Revised Estimate for the year 2014-15 of 86,879 showing a rise of 7·4 per cent.
|
GDP Deflators The CPI and WPI are proxy measures for inflation. But for the economy as a whole, GDP deflators whether at market prices or factor costs are more appropriate measures of the inflation in goods and services produced. These alternate measures match WPI but diverge somewhat from CPI-IW. In the case of CPI-IW, moderation in inflation in Q2 of 2009-10 is insignificant, largely because food inflation remained elevated during this period. |
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