India’s gross Domestic Product (GDP) in July-September, the second quarter of this financial year, picked up to 7.3 per cent from 7.1 per cent in April-June but stayed lower than 7.6 per cent in the corresponding period a year ago. Growth rate, as measured by Gross Value Added (GVA), declined to a three-quarter low of 7.1 per cent in July-September, data released by the Central Statistics Office (CSO) showed.
Though farm output GVA growth recorded a marked improvement in July-September, rising 3.3 per cent from 1.8 per cent in the previous quarter and 2.0 per cent last year, manufacturing GVA growth slumped to 7.1 per cent from 9.1 per cent growth in April-June and 9.2 per cent in the same quarter last year.
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Construction industry registered a GVA growth of 3.5 per cent in July-September compared with 1.5 per cent growth in the previous quarter and 0.8 per cent growth last year, while mining and quarrying sector’s GVA growth continued to stay in the negative territory at (-) 1.5 per cent as against (-) 0.4 per cent in April-June and 5 per cent growth last year. During July-September, private final consumption expenditure (PFCE), an indicator of household spending, was estimated at Rs 16.2 lakh crore, or about 54.9 per cent of the GDP. PFCE grew by 7.6 per cent in July-September as against 6.3 per cent growth recorded last year.
Gross fixed capital formation (GFCF), a proxy for measuring investment activity, sharply declined to (-) 5.6 per cent in July-September from a growth of 9.7 per cent in the corresponding period last year. The share of GFCF as a proportion of GDP also fell to 29 per cent in July-September this year from 32.9 per cent in the same quarter of 2015-16 and 29.6 per cent in April-June this year.
GVA growth of electricity, gas, water supply and other utility services slowed down to 3.5 per cent in July-September from 9.4 per cent in the previous quarter and 7.5 per cent a year ago. According to the new methodology followed by the CSO, GDP is calculated by adding product taxes to GVA at basic prices and removing subsidies.
With this growth number for the second quarter, GDP growth in April-September, the first half of this financial year, stands at 7.2 per cent as against 7.5 per cent growth in the same period a year ago. For the economy to grow at 8 per cent in 2016-17, as estimated by the government earlier, the GDP will need to grow by 8.8 per cent in second half of this financial year.
A growth rate of 8.8 per cent in the second half of 2016-17 seems difficult to achieve as growth is likely to be hit in the third quarter after the government’s decision to withdraw high-denomination currency notes. Chief Statistician T C A Anant, however, said that there is no data yet to gauge impact of the currency withdrawal on GDP. “People make assumptions and based on that they make statements. Once the data comes in, I will make a statement,” he said .
Chief Economic Adviser Arvind Subramanian said, “What we have for first half are actual numbers. It shows good consistent performance. For second half we will have to see, there are a lot of uncertainties. We have to analyse it before we say something.” Global rating agencies and economists have already lowered their growth forecast for 2016-17 following the currency withdrawal decision of the government.
Fiscal deficit at 79.3% of BE in Apr-Oct
New Delhi: The Centre managed to contain fiscal deficit in the first seven months of the current fiscal at Rs 4.23 lakh crore or 79.3 per cent of the full-year target of Rs 5.34 lakh crore, aided by higher tax revenue and curbs on capex lately. In the same period last year, the deficit was 74 per cent of the corresponding annual target. The deficit had stood at 83.9 per cent of the annual target in April-September of FY17. In April-October this year, the Centre’s capex (Plan and non-Plan) has declined by 12.81 per cent to Rs 1,24,959 crore as against Rs 1,43,329 crore in the year-ago period. Plan capex, seen critical to ignite economic activity, declined 8.1 per cent during the period while non-Plan capex fell by 20.8 per cent. FE
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