Govt revises GDP growth rate for 2017-18 to 7.2% from 6.7%

Real GDP or GDP at constant (2011-12) prices for 2017-18 and 2016-17 stand at ₹131.80 lakh crore and ₹122.98 lakh crore, respectively, showing growth of 7.2 per cent during 2017-18 and 8.2 per cent during 2016-17, the CSO said.

India’s gross domestic product (GDP) grew at 8.2% in 2016-17, 110 basis points more than the earlier figure of 7.1%, according to the second revised estimates released by the Central Statistical Office (CSO) on Thursday.

Earlier, the CSO in its advance estimate had pegged the GDP growth rate for 2018-19 at 7.2 per cent. (Reuters/ Representative Image)

One basis point is one hundredth of a percentage point.

The CSO also issued first revised estimates for the year 2017-18, revising GDP growth to 7.2% instead of the earlier 6.7% figure.

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These figures are significant as 2016-17 and 2017-18 were not normal years in terms of economic activity. The Narendra Modi government implemented demonetisation, which led to an abrupt withdrawal of 86% of the currency in circulation, on November 8, 2016. The government implemented goods and services tax (GST) in July, 2017. Both these moves led to a large disruption in economic activity, especially in agriculture and other unorganized sectors.

The revised figures suggest that the headwinds to growth due to these policies were lower than what was captured in earlier GDP estimates. Growth in the gross value added (GVA) component of agriculture and allied activities in 2017-18 has been revised from 3.4% to 5% in the first revised estimates.

The 6.3% growth in agricultural GVA in 2016-17 is due to a base effect as agricultural growth in 2014-15 and 2015-16 was only -0.2% and 0.6% due to deficient rainfall.

“The only new data point which is received between the first and second revised estimates of GDP is in the ministry of corporate affairs data which leads to the inclusion of non-listed companies in addition to listed ones,” said Pronab Sen, an economist and former chief statistician of India. “Therefore the large upward revision in agricultural growth figures is unusual”, Sen added.

A note by Soumya Kanti Ghosh, group chief economic advisor for the State Bank of India pointed that after the upward revision of 2017-18 GDP figures, the 2018-19 growth figure stands at 5.9% instead of the first estimate of 6.7%.