FY17 GDP growth retained at 7.1% and GVA growth revised sharply to 7.1%

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The Central Statistics Office (CSO) has sharply raised growth of gross value added (GVA) to 7.1 per cent in 2016-17, from earlier estimates of 6.6 per cent, due to revision in agriculture and mining expansion. However, it maintained its gross domestic product (GDP) growth estimate for FY17 at 7.1 per cent, but has upped it FY16 growth estimate to 8.2 per cent, from the earlier 7.9 per cent. 

Data, released a day ahead of the Budget for 2017-18, however, painted a rosy picture of gross fixed capital formation, representing investments. 

The Revised Estimates, released by the CSO, show the greatest divergence in the case of the primary sector. GVA by the sector, which includes agriculture and mining, is now estimated to have grown by 7.4 per cent in FY16, up from the earlier estimate of 4.4 per cent. 

A detailed breakdown of this sector shows that while GVA in agriculture and allied activities grew by 6.3 per cent in FY17, up from the earlier estimate of 4.9 per cent, mining and quarrying grew by a staggering 13 per cent in FY17, up from 1.8 per cent in the previous estimate. 

“The upward revision in the GVA growth for FY17 has been driven chiefly by agriculture, reflecting the record-high output, electricity, and a strikingly high revision in growth of mining and quarrying,” Aditi Nayar, principal economist of Icra, said.  

The secondary sector, comprising industry, is now estimated to have grown at 6.1 per cent for FY17, marginally higher than the earlier estimate of six per cent. Within this, manufacturing has maintained its growth of 7.9 per cent. Growth of the tertiary sector, which is basically services, has been estimated at 7.5 per cent, down from the earlier estimate of 7.7 per cent. 

Gross fixed capital formation (GFCF) growth was revised to 10.1 per cent in FY17, the highest in this series, from the previously anaemic 2.4 per cent. 

“The extent of the revision in the growth for GFCF is surprisingly large,” Nayar said.

The savings rate in the economy has dipped from 33.1 per cent in 2012-13 to 29.6 per cent in 2016-17 (at current prices). By far the biggest contributor to savings is the household sector, with a share of 54.2 per cent in FY17. But this has declined from 56.9 per cent in the previous year, largely due to a decline in financial savings.