Indian economy grew at 7.2 percent in October-December 2017, from 6.3per cent in the second quarter (July-September), data released by Central Statistics Office (CSO) showed on Wednesday.
The latest estimates broadly mirror the trends seen in high frequency indicators like corporate income and industrial output data. It is also in line with the government’s earlier estimates. In January, the government had projected that India’s GDP would grow at 6.5 percent in 2017-18.
The CSO’s second advance estimates released on Wednesday is based on actual data for three quarters.
The CSO also estimated that gross value added (GVA), which is GDP minus net taxes, grew 6.7 percent in October-December from 6.1 percent in the previous quarter and is expected to grow at 6.4 percent in 2017-18 from 7.1 percent in 2016-17. GVA is a more realistic guide to measure changes in the aggregate value of goods and services produced in an economy.
The manufacturing sector grew 8.1 percent in the third quarter of 2017-18 and is projected to expand at 5.1 percent during the full year, inching towards last year’s 7.9 percent growth, indicating that factories and firms have moved on from the irritants caused by GST.
A mid-year switchover to GST from July 1 prompted anxious shops and companies to de-stock and clear up the inventory pile ahead of the new system’s kick off. Companies had significantly cut back production in June as part of a business strategy to carry over as little old stock as possible into July. Nobody was quite sure whether prices will rise, fall or remain the same after GST, which partly explains the jostle to drain out old stocks at heavy price markdowns.
Government revenue expenditure (minus interest payments) also quickened to 24 percent (year-on-year) from 12 percent in the comparable period year before. Non-agricultural growth has shown signs of improvement due to better investment and service sector including public administration and credit growth indicators.
The agriculture sector grew 4.1 percent in October-December period. It is likely to grow at 3 percent in 2017-18 from 6.3 percent in the previous year, the CSO estimates said.
Farm sector growth will likely remain subdued because of unfavourable estimates for kharif output of crops such as oilseeds, pulses, cereals and cotton, and the base effect related to record-high output in 2016-17.
The construction sector grew 6.8 percent in October –December, broadly reflecting trends in output and sales of inputs, such as cement and steel, even as the sentiment remains weak after the RERA Act and the GST.