India’s GDP grew by 7.2% in the first half of fiscal year 2016-17 and demonetisation is expected to lower GDP growth in the second half of the year. The reason for the fall in GDP growth is the temporary disruptions in demand and supply due to cash crunch as the cash economy has been hit by shortage of currency. RBI lowered its growth forecast from 7.6% to 7.1% for the full fiscal year.
India 2nd quarter and 1st Half 2016-17 GDP by Economic Activity
GDP at constant (2011-12) prices grew at 7.3% for the second quarter of fiscal 2016-17 against growth rate of 7.1% seen in the first quarter of fiscal 2016-17. GDP growth for the first half of fiscal 2016-17 was at 7.2% against 7.55% seen last fiscal. GVA or Gross Value Add at basic price (GVA at basic prices = GVA at factor cost + net production taxes where net production taxes = production taxes – production subsidies) grew by 7.1% against 7.3% growth seen in the first quarter of fiscal 2016-17. GVA grew by 7.2% in the first half of fiscal 2016-17 against similar levels seen last year.
Agriculture grew by 3.3% against 1.8% growth seen last quarter. Mining and quarrying grew -1.5% against -0.4% , Manufacturing grew 7.1% against 9.1%, electricity grew by 3.5% against 9.4% and construction grew by 3.5% against 1.5%. In the services sector, trade, hotels, transport, communication & services related to broadcasting grew 7.1% against 8.1%, financial, real estate & professional services grew 8.2% against 9.4% and public administration, defence and other services grew by 12.5% against 12.3%.
India 2nd quarter & 1st Half 2016-17 GDP by Expenditure
Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices is estimated at 54.9% for the second quarter of fiscal 2016-17 against 55% for the first quarter of fiscal 2016-17. Government Final Consumption Expenditure (GFCE) is estimated at 13% against 12%. Gross Fixed Capital Formation ( GFCF) is estimated at 29% against 29.6%.
Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices is estimated at 54.9% for the first half of fiscal 2016-17 against 55% for the first half of fiscal 2015-16. Government Final Consumption Expenditure (GFCE) is estimated at 12.5% against 11.4%. Gross Fixed Capital Formation ( GFCF) is estimated at 29.3% against 32.8%
Understanding the Revised GDP Numbers after Base Year Change
Vidya Mahambare, Associate Professor of Economics, Great Lakes Institute of Management, Chennai
The Indian economy grew by 6.9% in 2013-14 (fiscal year that ended in March-2014), dramatically faster than the earlier estimate of 5%, as per the revised data from Central Statistical Organization (CSO). The new estimates revise the base year for GDP calculations to 2011-12 from 2004-05 earlier, and also incorporate the international methodology for the estimation of GDP.
We see below what changes CSO has done and how has it affected the GDP estimates.
1. CSO will now report ‘gross value added’ (GVA) at basic prices for industry-level GDP instead of GDP at factor cost that it earlier released. What does it mean?
a) GVA at basic prices = GVA at factor cost + net production taxes
where net production taxes = production taxes – production subsidies
Production taxes are levied as lump sum taxes on production and do not depend on the volume of production. Examples include land revenues, stamp and registration fees, and professional taxes.
Production subsidies are generally subsidies paid to producers on inputs to lower the cost of production. Eg; subsidies to farmers, small and village enterprises, and railways so on.
GVA at factor cost is the same as GDP at factor cost that CSO used to report earlier.
b) GVA at basic prices = compensation of employees + operating surplus/mixed income + consumption of fixed capital (depreciation)
In short, GVA at basic prices uses the income method for GDP calculation – it is sum of income earned by the factors of production, namely labour and capital. This gives valuable information about the share of labour and capital in each industry and in the national income.
These changes are in line with the internationally followed methodology for calculating GDP. For 2013-14, real GVA at basic prices (with 2011-12 base) has been estimated at Rs 91.7 trillion
2. CSO will now on refer to ‘GDP at market prices’ as ‘GDP’
GDP at market prices (GDP) = sum of GVA at basic prices for all industries + net product taxes
where net product taxes = product taxes – product subsidies
Product taxes and subsidies are levied on per unit of production. Examples of product taxes are excise tax, sales tax, service tax and custom duties. Product subsidies are food, fertilizer, petroleum subsidies, interest and insurance subsidies to farmers and households
For 2013-14, real GDP at market prices (with 2011-12 base) has been estimated at Rs 99.2 trillion. For 2013-14, nominal GDP at market prices (with 2011-12 base) has been estimated at a level similar to the earlier estimate with the 2004-05 base – around Rs 113 trillion. Therefore, at the current prices, the size of the economy remains largely unchanged.
3. What are the other changes that CSO has done to the methodology and coverage of calculating GDP?
a) CSO has incorporated updated information from its sources – improved coverage of local bodies, incorporation of the NSS surveys on un-incorporated enterprises and the employment-unemployment surveys
b) incorporated new sources of data – expansion of the coverage for industry and services firms using data filed by companies under the Ministry and Commerce e-governance initiative
c) Additional changes to the methodology for calculating the sub-components of GDP – For example; trade carried out by the manufacturing companies is now the part of the manufacturing sector which was earlier covered in ‘trade’ under the services sector.
4. With the above changes, what was the GDP growth last year?
As per the new estimates, real GDP grew by 6.9% in 2013-14 compared to the earlier estimate of 5%. The upward revision in growth came from revision in manufacturing and mining growth. As per the earlier estimates, both of these sectors had recorded negative growth in 2013-14, but are now estimated to have grown over 5% last year. As a result, the share of industry (mining, manufacturing, utilities and construction) was upwardly revised to nearly 32% for 2013-14.
5. How have GDP growth estimates from the demand-side altered with the revisions?
With these changes in place, CSO has now not only revised the GDP estimates for the past three years, but also released valuable and more detailed information than available earlier at the industry-level and also for the pattern of consumption expenditure, savings and capital formation. It will be useful if CSO released the back-series for the earlier years’ as per the new method, so that a longer time-series is available to the policymakers, investors and researchers.As per the new estimates, fixed investment grew by 3.0% last year compared to the earlier estimate of 0.2%. Similarly, both growth in private consumption and government consumption have been revised up significantly.
6.What are the implications of these revisions for the monetary policy?
With these significantly upward revisions in GDP, the inevitable question which arises is in terms of its implication for the policies, especially the monetary policy. RBI in its 3rd February 2015 policy review indicated that it is reviewing the new GDP numbers and will then start using it for policy reference.
India’s GDP Growth – Previous Quarters
India’s GDP growth at 7.1% for the 1st quarter of 2016-17 will give rise to optimism of higher growth in the next three quarters as both the government and RBI sticks to its full year forecast of 7.6% growth. The optimism on GDP growth is backed by the rise in the benchmark equity indices, the Sensex and Nifty, that are trading at one year highs and are just off 5% from record highs.
Corporate performance has been good in the first quarter of FY 2017, with sectors such as Auto, Cement and Infrastructure showing signs of pick up in activity. Interest rates have come off with the ten year gsec yield closing below 7% on the 2nd of September, the lowest since 2009. Liquidity is comfortable in the system and that will spur higher credit growth in the festive season. Monsoons have been normal this year leading to optimism on rural demand.
Expected growth in GDP over the next three quarters will lead the Sensex and Nifty higher in the coming weeks and months.
India 1st quarter 2016-17 GDP by Economic Activity
GDP at constant (2011-12) prices grew at 7.1% for the first quarter of fiscal 2016-17 against growth rate of 7.9% seen in the fourth quarter of fiscal 2015-16. GVA or Gross Value Add at basic price (GVA at basic prices = GVA at factor cost + net production taxes where net production taxes = production taxes – production subsidies) grew by 7.3% against 7.4% growth seen in the fourth quarter of fiscal 2015-16. Agriculture grew by 1.8% against 2.3% growth seen last quarter. Mining and quarrying grew -0.4% against 8.6% , Manufacturing grew 9.1% against 9.3%, electricity grew by 9.4% against 9.3% and construction grew by 1.5% against 4.5%. In the services sector, trade, hotels, transport, communication & services related to broadcasting grew 8.1% against 9.9%, financial, real estate & professional services grew 9.4% against 9.1% and public administration, defence and other services grew by 12.3% against 6.4%.
India 1st quarter 2016-17 GDP by Expenditure
Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices is estimated at 55% for the first quarter of fiscal 2016-17 against 55.3% for the fourth quarter of the previous year. Government Final Consumption Expenditure (GFCE) is estimated at 12% against 7.6%. Gross Fixed Capital Formation ( GFCF) is estimated at 29.6% against 29.4%.
India GDP for Fiscal 2015-16 GDP by Economic Activity
GDP at constant (2011-12) prices grew at 7.6% for fiscal 2015-16 against growth rate of 7.2% seen in fiscal 2014-15. GVA or Gross Value Add at basic price (GVA at basic prices = GVA at factor cost + net production taxes where net production taxes = production taxes – production subsidies) grew by 7.2% against 7.1% growth seen in fiscal 2014-15. Agriculture grew by 1.2% against -2% growth seen last year. Mining and quarrying grew 7.4% against 10.8% , Manufacturing grew 9.3% against 5.5%, electricity grew by 6.6% against 8% and construction grew by 3.9% against 4.4%. In the services sector, trade, hotels, transport, communication & services related to broadcasting grew 9% against 9.8%, financial, real estate & professional services grew 10.3% against 10.6% and public administration, defence and other services grew by 6.6% against 10.7%.
India Advance Estimates of Fiscal 2015-16 GDP by Expenditure
Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices is estimated at 55.5% for fiscal 2015-16 against 55.6% for the previous year. Government Final Consumption Expenditure (GFCE) is estimated at 9.9% against 10.4%. Gross Fixed Capital Formation ( GFCF) is estimated at 31.2% against 32.3%.
India 4th quarter 2015-16 GDP by Economic Activity
GDP at constant (2011-12) prices grew at 7.9% for the fourth quarter of fiscal 2015-16 against growth rate of 7.5% seen in the fourth quarter of fiscal 2014-15. GVA or Gross Value Add at basic price (GVA at basic prices = GVA at factor cost + net production taxes where net production taxes = production taxes – production subsidies) grew by 7.4% against 6.2% growth seen in the fourth quarter of fiscal 2014-15. Agriculture grew by 2.3% against -1.7% growth seen last year. Mining and quarrying grew 8.6% against 10.1% , Manufacturing grew 9.3% against 6.6%, electricity grew by 9.3% against 4.4% and construction grew by 4.5% against 2.6%. In the services sector, trade, hotels, transport, communication & services related to broadcasting grew 9.9% against 13.1%, financial, real estate & professional services grew 9.1% against 9% and public administration, defence and other services grew by 6.4% against 4.1%.
India 4th quarter 2015-16 GDP by Expenditure
Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices is estimated at 55.3% for the fourth quarter of fiscal 2015-16 against 55.2% for the fourth quarter of the previous year. Government Final Consumption Expenditure (GFCE) is estimated at 7.6% against 8%. Gross Fixed Capital Formation ( GFCF) is estimated at 29.4% against 32.4%.
India 3rd quarter 2015-16 GDP by Economic Activity
GDP at constant (2011-12) prices grew at 7.3% for the third quarter of fiscal 2015-16 against growth rate of 7.7% seen in the third quarter of fiscal 2014-15. GVA or Gross Value Add at basic price (GVA at basic prices = GVA at factor cost + net production taxes where net production taxes = production taxes – production subsidies) grew by 7.1% against 6.7% growth seen in the third quarter of fiscal 2014-15. Agriculture grew by -1% against -2.4% growth seen last year. Mining and quarrying grew 6.5% against 9.1% , Manufacturing grew 12.6% against 1.7%, electricity grew by 6% against 8.8% and construction grew by 4% against 4.9%. In the services sector, trade, hotels, transport, communication & services related to broadcasting grew 10.1% against 6.2%, financial, real estate & professional services grew 9.9% against 12.1% and public administration, defence and other services grew by 7.5% against 25.3%.
India 3rd quarter 2015-16 GDP by Expenditure
Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices is estimated at 55.8% for the third quarter of fiscal 2015-16 against 56.3% for the third quarter of the previous year. Government Final Consumption Expenditure (GFCE) is estimated at 9.6% against 9.8%. Gross Fixed Capital Formation ( GFCF) is estimated at 30.4% against 31.7%.
India 2nd quarter 2015-16 GDP by Economic Activity
GDP at constant (2011-12) prices grew at 7.4% for the second quarter of fiscal 2015-16 against growth rate of 8.4% seen in the second quarter of fiscal 2014-15. GVA or Gross Value Add at basic price (GVA at basic prices = GVA at factor cost + net production taxes where net production taxes = production taxes – production subsidies) grew by 7.4% against 8.4% growth seen in the second quarter of fiscal 2014-15. Agriculture grew by 2.2% against 2.1% growth seen last year. Mining and quarrying grew 3.2% against 1.4% , Manufacturing grew 9.3% against 7.9%, electricity grew by 6.7% against 8.7% and construction grew by 2.6% against 8.7%. In the services sector, trade, hotels, transport, communication & services related to broadcasting grew 10.6% against 8.9%, financial, real estate & professional services grew 9.7% against 13.5% and public administration, defence and other services grew by 7.4% against 8.4%.
GDP at current prices (nominal GDP) is estimated at Rs 32.66 trillion, a growth of 6% year on year against Rs 30.8 trillion seen in second quarter of the last fiscal year, a growth of 13.6%.
India 2nd quarter 2015-16 GDP by Expenditure
Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices is estimated at 55.9% for the second quarter of fiscal 2015-16 against 56.2% for the second quarter of the previous year. Government Final Consumption Expenditure (GFCE) is estimated at 12.90% against 13.2%. Gross Fixed Capital Formation ( GFCF) is estimated at 30.1% against 30.3%.
India 1st quarter 2015-16 GDP by Economic Activity
GDP at constant (2011-12) prices grew at 7% for the first quarter of fiscal 2015-16 against growth rate of 6.7% seen in the first quarter of fiscal 2014-15. GVA or Gross Value Add at basic price (GVA at basic prices = GVA at factor cost + net production taxes where net production taxes = production taxes – production subsidies) grew by 7.1% against 7.4% growth seen in the first quarter of fiscal 2014-15. Agriculture grew by 1.9% against 2.6% growth seen last year. Mining and quarrying grew 4% against 4.3% , Manufacturing grew 7.2% against 8.4%, electricity grew by 3.2% against 10.1% and construction grew by 6.9% against 6.5%. In the services sector, trade, hotels, transport, communication & services related to broadcasting grew 12.8% against 12.1%, financial, real estate & professional services grew 8.9% against 9.3% and public administration, defence and other services grew by 2.7% against 2.8%.
GDP at current prices (nominal GDP) is estimated at Rs 32.42 trillion, a growth of 8.8% year on year against Rs 29.8 trillion seen in first quarter of the last fiscal year, a growth of 13.4%.
India 1st quarter 2015-16 GDP by Expenditure
Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices is estimated at 58.7% for the first quarter of fiscal 2015-16 against 58.5% for the first quarter of the previous year. Government Final Consumption Expenditure (GFCE) is estimated at 11.4% against 12.1%. Gross Fixed Capital Formation ( GFCF) is estimated at 29.8% against 30.4%.
India Annual GDP 2014-15 by Economic Activity
GDP at constant (2011-12) prices is grew at 7.3% for fiscal 2014-15 against growth rate of 6.9% seen in fiscal 2013-14. Agriculture grew by 0.2% against 3.7% growth seen last year. Mining and quarrying grew 2.4% against 5.4% , Manufacturing grew 7.1% against 5.3%, electricity grew by 7.9% against 4.8% and construction grew by 4.8% against 2.5%. In the services sector, trade, hotels, transport, communication & services related to broadcasting grew 10.7% against 11.1%, financial, real estate & professional services grew 11.5% against 7.9% and public administration, defence and other services grew by 7.2% against 7.9%.
GDP at current prices (nominal GDP) is estimated at Rs 125.4 trillion, a growth of 10.5% against Rs 113 trillion seen in fiscal 2013-14, a growth of 13.6%.
India Annual GDP 2014-15 by Expenditure
Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices is estimated at 57% for fiscal 2014-15 against 57.5% for the previous year. Government Final Consumption Expenditure (GFCE) is estimated at 10.9% against 10.9%. Gross Fixed Capital Formation ( GFCF) is estimated at 30% against 30.7%.
