GDP growth rate for 2017-18 revised upwards to 7.2% from 6.7%

During 2017-18, primary sector which includes agriculture grew at an estimated rate of 5%. In this file photo, farmers thrash paddy crops in Srinagar.

During 2017-18, primary sector which includes agriculture grew at an estimated rate of 5%. In this file photo, farmers thrash paddy crops in Srinagar.   | Photo Credit: Reuters

Earlier, the CSO in its advance estimate had pegged the GDP growth rate for 2018-19 at 7.2 per cent.

The government on Thursday revised its forecast for GDP growth for 2017-18 to 7.2% from the earlier estimate of 6.7%. It also revised the actual growth rate in 2016-17 to 8.2% from the 7.1% estimated earlier.

The revisions, which were made by the Ministry of Statistics and Programme Implementation in its First Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation, 2017-18, have been criticised by economists, who say the numbers do not match up to the ground realities. This is especially the case in the demonetisation year of 2016-17, which shows a strong growth in sectors that were widely agreed to have been badly hit by the exercise.

“For 2016-17, this hike of 1.1 percentage points in GDP growth comes as a surprise because it was the demonetisation year,” D.K. Srivastava, chief policy adviser at EY India, said. “If you look at the demand side, the main factor for this is the increase in private final consumption expenditure, which has also increased 1 percentage point. That is inconsistent with the idea of people having less cash to make purchases.”

He further said the main driver of the upward revision on the output side in 2016-17 was the construction sector, which has been revised upwards by 4.7 percentage points. “Construction is also a sector which has a large informal sector component and all earlier analyses had indicated that demonetisation adversely affected the informal sectors,” Mr. Srivastava said. “So that is also a surprise.”

“The estimates of GDP and other aggregates for 2015-16 and 2016-17 have undergone revision on account of the use of the latest data available on agricultural production, industrial production, and government expenditure (replacing the Revised Estimates with Actual for 2016-17) and also more comprehensive data available from various source agencies like the MCA and the NABARD and State/Union Territory Directorates of Economics and Statistics,” the government said, explaning the revision.

Looking at 2017-18, analysts say the government’s explanation does not hold water because the two main drivers of the upward revision — the mining and quarrying sector and the public administration sector — both have data that is compiled by the government itself and so should not have undergone such a vast revision. “It is not something we are able to explain,” Madan Sabnavis, Chief Economist at CARE Ratings, said. “The revisions where the growth rates are going up by 1 percentage point and 0.5 percentage points are difficult to reconcile with the ground-level facts.”

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Printable version | Apr 4, 2020 3:58:04 AM |

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