India's economy is set for a slowdown in the financial year ending March 31 with the government pegging the gross domestic product (GDP) growth rate at 6.5% significantly lower than the growth rate of 7.1% last year.
This is the slowest pace of growth in the country's economy in the last four years.
According to the first advance estimates released by the Central Statistical Office, agriculture, the mainstay of the country's economy, is expected to grow at 2.1% this year. This is less than half of the last year's growth rate of 4.9%.
Similarly, manufacturing, the fulcrum of 'Make in India' initiative too is expected to decelerate substantially from the previous year. The growth in the manufacturing sector is expected to be at 4.6% this year as against 7.9% in 2016-17.
The construction sector is expected to grow at 3.6% in 2017-18 from 7.1% last year. The impact of the construction sector is reflected in the deceleration and recent decline in steel and cement production.
The per capita income of Indian people is expected to slow down at 8.3% this year as against 9.7% last year. The data showed per capita income is expected to be Rs 1,11,782 in 2017-18. Per capita income is a measure of people's living standard.
The growth in financial, real estate and professional services sector is, however, expected to be better than last year at 7.3%. Last year this sector had growth at 5.7%.
The advance estimates have, however, been compiled on the basis of actual data of the last seven months (April-October) in the fiscal 2017-18 and extrapolated for the next five months (November-March) on the basis of that.
Since the initial seven months were weighed down by demonetisation and GST hiccups, Chief Statistician T C A Anant said he was hopeful of a better recovery in the third (Oct-Dec) and the fourth (Jan-March) quarters, the actual data for which would be released in February and May respectively. Anant said CSO's projections for the first advance estimates were therefore conservative.
A series of high-frequency data such as manufacturing PMI, vehicle sales, core sector growth released in the course of last two weeks have also pointed towards a growth recovery in the economy
The usefulness of advance estimates is that they help the finance ministry in making Budget projections for the next financial year.
