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Reforms are yielding results, says Debroy on GDP estimate

06 January 2018

The services sector, which accounts for almost 60% of the economy, is estimated to grow 8.3% in 2017-18, higher than the 7.7% in 2016-17.

The Gross Domestic Product (GDP) figure of the Indian economy touched the low 6.5 mark as compared to the 7.1 figure of the previous fiscal estimate.

India's GDP would reach Rs 129.85 lakh crore in 2017-'18 as against Rs 121.90 lakh crore in the 2016-'17 fiscal year, the office said.

Meanwhiele, the CSO also projected that the manufacturing sector will grow at 4.6 percent in 2017-18, compared to 7.9 percent in 2016-17.

Former Planning Commission Deputy Chairman Montek Singh Ahluwalia said the GDP growth would be around 6.2 per cent to 6.3 per cent for the current fiscal.

"Anticipated growth of real GVA at basic prices in 2017-18 is 6.1 per cent as against 6.6 per cent in 2016-17", it said.

He said that 6.5 per cent for the full year meant that Q3 and Q4 numbers will be far better than first half of the year. Instead of accelerating from 7.1 per cent, GDP growth is likely to slip.

Mr Sinha said accelerating GDP growth from this level and maintaining it close to 8 per cent will be a tough task even after the economy begins to reap the benefits of GST.

Moody's Investors Service had raised India's sovereign rating for the first time in over 13 years, saying that growth prospects have improved with continued economic and institutional reforms.

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The slowdown is related to the poor performance in agriculture, manufacturing and construction sectors where the growth data hovered between 2.1 percent to 4.6 percent only.

The Gross Value Added (GVA) has been projected to be at 6.1 per cent versus 6.6 in the past year.

The advance estimates have, however, been compiled on the basis of actual data of the last seven months (April-October) in the fiscal 2017-18 and extrapolated for the next five months (November-March) on the basis of that.

"Accordingly, the advance estimates for GDP and GVA growth appear to be understating economic expansion for FY2018, in our view".

"Nominal GDP growth is expected at 9.5%".

"Anticipated growth of real GVA at basic prices in 2017-18 is 6.1% as against 6.6%t in 2016-17".

The nominal GDP will be used as the benchmark for most indices in Union Budget 2018 to be presented by finance minister Arun Jaitley on 1 February.

"In a way, we are being conservative in our estimates", he said, and added that the statistics office has estimated the numbers assuming that budgetary targets will be met. Growth is below the government's early estimate. "And as the estimates are missing the RBI expectations, the central bank is likely to pause in its next policy meeting in February 2018".

Reforms are yielding results, says Debroy on GDP estimate