GDP to grow at 7.2% for FY19
GDP growth rate
- The government has projected GDP growth for the full year 2018-19 to come in at 7.2%, which implies that growth in the second half of the year would slow significantly to 6.8% from the 7.6% clocked in the first half of the year, according to the first advance estimates of national income for 2018-19 released by the Ministry of Statistics.
- This growth estimate for the entire year is slower than the Reserve Bank of India’s forecast of 7.4%.
- There is an indication of a slowdown in the second half, but not for such a slowdown.
- Some of the slowdown seems to be in the services sector, particularly in those sectors with a larger weight such as transport and communications, and financial services. Otherwise, there doesn’t seem to be a reason for the slowdown.
- A growth rate of 7-7.2% for the second half might have been more realistic.
Agriculture and Manufacturing sector
- The advance estimate says that the growth in the agriculture sector would be 3.8% in 2018-19, faster than the 3.4% in the previous year.
- The manufacturing sector is estimated to grow at 8.3% in 2018-19 compared with 5.7% in 2017-18.
- However, this represents a dramatic slowdown in the manufacturing sector in the second half of the year, to 6.3% from 10.3% in the first half.
Construction set to grow
- The construction sector, however, is expected to witness an acceleration in the second half of the year.
- The transport and communications services sector is expected to grow at 6.9% in 2018-19, down from 8% in the previous year.
- The financial services sector is set to grow at 6.8% in 2018-19 from 6.6% in 2017-18.
- The final numbers would depend on three factors — how the oil prices pan out and hence, inflation, the government spending in the pre-election last quarter and the mood of the economy post conclusion of U.S.-China trade negotiations.
Point to remember