Magazine

English Hindi

Index

Governance & Social Justice

International Relations

Economy

Economy

1st Advance Estimates of Economic Growth by CSO

1st Advance Estimates of Economic Growth by CSO

Relevance

  • GS 3 || Economy || Structure of the Indian Economy || National Income & it’s measures

 Why in News?

  • CSO Released first advance estimates of economic growth.

Growth Scenarios

  • CS Office expects 7.2% GDP growth in 2018-19. Final estimates will available after financial year. Improvement over the 2017-18.
  • There is clear deceleration in the growth momentum that is in the second half of the financial year, the growth is coming down, compared to first half, which was6%.
  • This fall is somehow depicted in other sectors also. Manufacturing sector is expected to grow at 8.3% in year 2019, higher than the 5.7% last year.
  • But it is reckoned to get slow down from 10.3% in the first half to 6.4% in the second half.
  • Private and government consumption may be normal and in moderation by the national expenditure account.

Investments Scenario

  • In the second half of the year, gross fixed capital formation (or investments) is expected to rise.
  • A rise in the rate of investments up to 12.2% in 2018-19 may be probable, compare to the previous year from 7.6%.
  • Report has also highlighted that 30% decline in new investments from December 2016 to Dec 2018.
  • Because of General Elections in 2019, New Investments may face further dip or pause.
  • The data compiled by the Centre for Monitoring Indian Economy (CMIM) showed a fall in investment projects being completed.

Other Scenarios

  • CSO data also reveals that the per capita net national income in 2018-19 will be 1,25,397, showing a rise of 11.1 per cent as compared to 1,12,835 during 2017-18.
CSO’s Growth Estimate
FY 19 (in %) FY 18 (in %)
Agriculture 3.8 3.4
Industry 6.85 5.37
Services 8.2 7.5
Overall GDP 7.2 6.7
  • Agriculture has a share of nearly 14 per cent, while industry has a little over 30 per cent and the remaining 56 per cent belongs to services.
  • Gross Fixed Capital Formation (GFCF): the Investment’s Parameter
    • 58 lakh crore in 2018-19
    • 79 lakh crore in 2017-18

Dispute

  • Below the expectation of most institutions mapping the Indian economy. RBI, World Bank Group and the IMF expected the Indian economy to grow by 7.4% in this financial year.
  • In fact, for a moment, Finance Ministry also reckoned the economy to grow at 7.5% in this year.

Way Ahead

  • Despite of these quandaries, India remains the fastest-growing major economy in the world, by some bodies to hope for. But, because of the other factors, economy may face some other implications in second half.
  • Fiscal Deficit: may have to borrow in order to meet the need. The target of the govt. was to maintain the fiscal deficit within a range of 3.3 % of the GDP. Last 8 months of the fiscal deficit, it has crossed 112% of the full-year target. But, govt. has already crossed in the first 8 months of the year.
  • The govt. will have to prepare the interim budget because of the general elections 2019, so it must heed over the estimates of CSO.

In this context, the CSO estimates are significant as they will provide the foundation for the preparation of the interim Budget.