Economy

GDP likely to grow by 6.5% this fiscal

GDP likely to grow by 6.5% this fiscal

Measuring GDP is complicated (which is why we leave it to the economists), but at its most basic, the calculation can be done in one of two ways: either by adding up what everyone earned in a year (income approach), or by adding up what everyone spent (expenditure method). It was 7.5 percent in 2014-15. "(This) confirms strong turnaround of economy.

Nominal GDP will be used as the benchmark for most indices such as fiscal deficit in Union Budget 2018, to be presented by finance minister Arun Jaitley on 1 February.

"The growth in GDP during 2017-18 is estimated at 6.5 per cent as compared to the growth rate of 7.1 per cent in 2016-17", the Ministry of Statistics & Programme Implementation said in its estimate of National Income for 2017-18.

The government estimated that gross value added (GVA), which is GDP minus net taxes, will grow at 6.1 percent in 2017-18.

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.

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The data also showed substantial rural distress as the agricultural output inflation rate as measured by GDP deflators, is expected to fall to 0.7 per cent against 4.1 per cent over this period.

Similarly, manufacturing, the fulcrum of "Make in India" initiative too is expected to decelerate substantially from the previous year. The economy grew at 7.1% in 2016-17.

CSO data showed that in the first half (April-September) of the financial year, the economy grew at 6 per cent, indicating that it will accelerate in the second half (October-March). This is less than half of the last year's growth rate of 4.9%. Gross Fixed Capital Formation (GFCF), a proxy for private investment in the country is set to be 29% of the GDP in 2017-18 as against 29.5% in 2016-17. The same was the case in the previous year, barring government-supported services, according to media reports.

India may not be the "fastest growing large economy " With the drop in the GDP growth, India might lose the tag of being the fastest growing large economy to China if the forecasts of the International Monetary Fund (IMF) come true.