This Fiscal Economic Growth won’t be more than 7%
The country’s economy is expected to achieve 6.4–6.7% growth in the current financial year. In the first half of the year, the economy grew at a rate of 6%. Growth in July–September quarter reached to 6.3%. Growth in the previous quarter was at the lower level of three years with 5.7%. In 2016–17, gross domestic product (GDP) was 7.1% and gross value added (GVA) increased 6.6%.
Some recent signs have revealed recovery in the economy. In November, core sector growth had reached 6.8% which is 13 Months high, while the manufacturing PMI was at five years high. The Reserve Bank of India (RBI) has kept the economic growth projection for 2017-18 at 6.7%. Most sovereign economists are anticipated to augment GVA 6.5% in the present financial year, IDFC Bank’s Chief Economist, Indranil Pan said, “Structural recovery is not known from all indicators. Credit growth has not approached so far and there is a lack of production as well.”
The total value left after subtracting the rate of inputs and raw materials used for the goods and services produced is known as GVA economy. GVA figures out GDP figures by adding total tax on products. Most market analyst now opt to focus on GVA, given the improbability in indirect taxes. Growth of GVA and GDP in the first quarter was 5.6% and 5.7%, respectively. The main reason for the decline in growth in the first quarter was the effect of the execution of the Goods and Services Tax (GST) and the left effect of currency ban. In the second quarter of 2017–18, GDP growth was 6.3% and GVA growth was 6.1%.
The reason for the restoration in economic activity is the rise in industrial growth. During April–October, the IIP (Index of Industrial Production) was 2.5%. This has grown at 5.5% in the same period of the previous year. Chief economist of Axis Bank Saugata Bhattacharya said that the situation of agriculture seems to be good and manufacturing is improving. This will help in growth in the fourth quarter of the current financial year.
India Ratings and Research has projected GDP growth to be 6.7%, but Chief Economist of India Ratings, Devendra Kumar Pant said that seeing the growth in the first half of the year, this figure is intricate to accomplish. GDP growth was 6% in six months ending September, 2017, compared to 7.7% in the same period last year.