India’s GDP grows at 7.1% in the year 2016-17
The growth in GDP during 2016-17 is estimated at 7.1% as compared to the growth rate of 8% in 2015-16
PROVISIONAL ESTIMATES OF NATIONAL INCOME, 2016-17
Real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices for the year 2016-17 is estimated at Rs. 121.90 lakh crore showing a growth rate of 7.1% over the year 2015-16 of Rs. 113.81 lakh crore. While GDP at current prices in the year 201617 is estimated at Rs. 151.84 lakh crore, showing a growth rate of 11.0 % over the estimates of GDP for the year 2015-16 of Rs. 136.82 lakh crore. Real GVA, i.e, GVA at basic constant (2011-12) prices for the year 2016-17 is estimated at Rs. 111.85 lakh crore showing a growth rate of 6.6 % over the GVA for the year 2015-16 of Rs.104.91 lakh crore.
The sectors which registered growth rate of over 7.0% at constant prices are ‘public administration, defence and other services’ (11.3%), ), manufacturing (7.9%),‘ trade, hotels, transport, communication and services related to broadcasting’ (7.8%),‘electricity, gas, water supply other utility services (7.2%) ’.The growth in the ‘agriculture, forestry and fishing’, ‘mining and quarrying’, ‘construction’ and ‘financial, real estate and professional services’ is estimated to be 4.9%, 1.8%, 1.7 % and 5.7% respectively.
Provisional Estimates of GVA at Basic Price by Economic Activity (At 2011-12 prices)
Source: PHD Research Bureau, compiled from MOSPI
Note: PE pertains to Provisional Estimates
The salient features of the estimates for sectors are detailed below:
Agriculture – The ‘agriculture, forestry and fishing’ sector has shown a growth rate of 4.9 at constant prices and 9.0 % at current prices. The GVA estimates of this sector have been compiled using the Third Advance Estimates of production of food grains for 2016-17. The third advance estimates of food grain production was 273.38 million tonnes in 2016-17 which is higher than the second advance estimates of food grain production during 2016-17 of 271.98 million tonnes and final estimates of 251.57 million tonnes during the agricultural year 2015-16.
Mining and quarrying— The ‘mining and quarrying’ sector has shown a growth rate of 1.8% at constant prices and 1.9% at current prices. As per the available information, private corporate sector growth in the mining sector as estimated from major listed companies at current prices was 1.8 % . The Index of Industrial Production of mining registered growth of 5.3% during 2016-17. Production of coal and crude oil registered growth rates of 3.6 % and (-) 2.5% during 2016-17.
Manufacturing– The growth in the ‘manufacturing’ sector is estimated at 7.9% at constant prices and 9.3 % at current prices. The private corporate sector growth (which has a share of around 70 % in the manufacturing sector) as estimated from available data of listed companies with BSE and NSE was 12.4 % at current prices during 2016-17. The quasi corporate and unorganized segment (which includes individual proprietorship and partnerships and khadi & village Industries having a share of around 23 % in the manufacturing sector) has been estimated using IIP of manufacturing. The IIP of manufacturing registered a growth rate of 4.9 % during 2016-17.
Electricity, Gas, water supply and other utility services– GVA at basic prices for 2016-17 from ‘Electricity, gas, water supply and other utility services’ sector is estimated to grow by 7.2% at constant prices and 6.5 % at current prices. The key indicator of this sector, namely, IIP of Electricity registered a growth rate of 5.8 per cent during April-March, 2016-17.
Construction– GVA at basic prices for 2016-17 from ‘Construction’ sector is estimated to grow by 1.7% at constant prices and 3.5 % at current prices. Key indicators of construction sector, namely, production of cement and consumption of finished steel registered growth rates of (-) 1.3 per cent and 3.0 %, respectively, during 2016-17.
Trade, hotels, transport, communication and services related to broadcasting — GVA at basic prices for 2016-17 from this sector is estimated to grow by 7.8% at constant prices and 9.8 % at current prices. Key indicator used for estimating GVA from Trade sector is the sales tax growth. As per the available monthly data on State accounts, sales tax collection grew by 11.4 % during 2016-17. Indicator used for measuring GVA from hotels and restaurant sector is the private corporate growth in this sector.
QUARTERLY ESTIMATES OF GDP FOR Q4 (JANUARY-MARCH), 2016-17
GDP at constant (2011-12) prices in Q4 of2016-17 is estimated at Rs. 32.28 lakh crore, as against Rs. 30.42 lakh crore in Q4 of 2015-16, showing a growth rate of 6.1 %. GVA at basic prices at constant (2011-12) prices in Q4 of 2016-17 is estimated at Rs. 28.69 lakh crore, as against Rs. 27.18 lakh crore in Q4 of 2015-16, showing a growth rate of 5.6 %.
Growth rates in various sectors are as follows: ‘agriculture, forestry and fishing’ (5.2 %), ‘mining and quarrying’ (6.4%), ‘manufacturing’ (5.3 %), ‘electricity, gas, water supply and other utility services’ (6.1%) ‘construction’ (-3.7 %), ‘trade, hotels, transport and communication’ (6.5%), ‘financial, real estate and professional services’ (2.2%), and ‘Public administration, defence and other Services’ (17.0 %).
Quarterly Estimates of GVA at Basic Prices for 2016-17 (at 2011-12 prices)
Source: PHD Research Bureau, compiled from MOSPI
Our view Point
Real GDP growth at 7.1% at 2011-12 prices is in line with expectations vis-à-vis impact of demonetization on various sectors of the economy such as mining, manufacturing, construction and trade sectors. We look forward to a good GDP growth with three major positive developments taking place in the current year i.e positive effect of demonetization, implementation of GST and low inflationary expectations vis-à-vis IMD forecasts a good monsoon.
Growth is expected to be at around 8% in 2017-18. The growth rate of agriculture and allied sector at 4.9% in 2016-17 is inspiring and we expect more reforms to come in the sector to strengthen the growth further in a sustainable trajectory. Focus on food processing sector would help in creation of employment opportunities, increase in rural incomes and will boost the manufacturing growth. Reforms in the construction sector for ease of doing business would go a long way to improve India ’s business environment, attract investments and to absorb unskilled, semiskilled and skilled workforce.
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Dr. S P Sharma