The country’s GDP will grow at 5 per cent in the current fiscal year (April 2019-March 2020) as compared to 6.8 per cent in 2018-19, according to the First Advance Estimates released by the Ministry of Statistics & Programme Implementation (MoSPI).
The Real GDP which is also known as the GDP at constant prices (2011-12) in 2019-20 is likely to attain a level of Rs 147.79 lakh crore, as against the provisional estimate of GDP for the year 2018-19 of Rs 140.78 lakh crore, released on May 31, 2019, the release said.
The slowdown in growth has been mainly on account of deceleration in the manufacturing sector which is estimated to grow at 2.0 per cent in 2019-20 from 6.9 per cent year-ago.
The slowdown is also seen in some sectors like agriculture, construction and electricity, gas and water supply. Other sectors, including mining, public administration, and defence, showed minor improvement.
The data compiled for the Advance Estimates is based on Benchmark-Indicator method, the government release said.
The release further explained that the sector-wise estimates have been obtained by the extrapolation of economic indicators such as the data of Index of Industrial Production (IIP) of first seven months and performance of the listed companies up to the quarter ending September.
It also includes the data of the first advance estimates of crop production in India and the accounts of central and state governments. Information of deposits and credits, earnings of Railways, passengers and cargo data from the airlines, cargo at major seaports and sales of commercial vehicles for the first eight months of FY20.
How India Inc reacted
“The FY20 GDP growth estimates at 5 per cent is on expected lines. The 5 per cent print will put strain on the fisc forcing the govt to cut down on expenditure in Q4. This will further delay the recovery in growth. The growth recovery expected from Q1 FY 21 will be weak & slow,” V K Vijaykumar, Chief Investment Strategist at Geojit Financial Services said in a statement.
“CSO puts advance estimate of FY20 real GDP growth at 5 per cent, same as that to RBIs but higher than our forecast of 4.6 per cent. Interestingly, CSO expects personal consumption growth to pick up from 4.1 per cent in 1HFY20 to 7.3 per cent in 2HFY20, which certainly seems optimistic to us. Surprisingly CSO also expects govt consumption to continue to grow strongly at 8.5 per cent in 2HFY20, which seems challenging considering massive receipt shortfall,” Nikhil Gupta, Chief Economist, Motilal Oswal Financial Services said in a statement.