India’s GDP Growth For FY19 Revised Downwards To 6.1%
A worker leans against a cart as other workers transport goods at Khari Baoli spice market in New Delhi, India, on Wednesday, May 30, 2018. Photographer: Ruhani Kaur/Bloomberg

India’s GDP Growth For FY19 Revised Downwards To 6.1%

The Indian economy grew at a slower pace last year than projected earlier.

GDP growth in 2018-19 stood at 6.1 percent compared with the provisional forecast of 6.8 percent, according to the first revised estimates released by the Ministry of Statistics and Programme Implementation on Friday. GVA growth was revised to 6 percent for the last fiscal compared with a provisional estimate of 6.6 percent.

Per capita income is estimated to have risen 9.7 percent to Rs 1,26,521 in 2018-19.

The reduction in GDP growth for the previous year could mean an upward revision in growth estimates for the ongoing financial year 2019-20. This fiscal, the economy is expected to grow 5 percent, the slowest pace in more than a decade, amid slowing consumption.

For 2017-18, GDP growth was revised lower to 7 percent from the earlier estimate of 7.2 percent. This is the second revised estimate for this year. GVA growth was revised to 6.6 percent from 6.9 percent.

For 2016-17, GDP growth was revised upward to 8.3 percent from the earlier estimate of 8.2 percent. This is the third revised estimate for that year.

The primary and the secondary sectors were both responsible for pulling down growth in the 2018-19. While the primary sector grew just 1 percent compared with 2.7 percent projected in the provisional estimates, the secondary sector grew 6 percent as against 7.5 percent projected earlier.

The reason for the variation in the agriculture sector was because of updating estimates of crops based on Fourth Advance Estimates, said the statement. The secondary sector estimates too, were updated after incorporating revised institution-wise data.

The first revised estimates are compiled using industry-wise detailed information instead of the benchmark indicator method used to compute provisional estimates. Provisional estimates for 2019-20 were released in May 2019.

The CSO has sharply scaled back the GVA growth for  FY19 to 6 percent from the earlier 6.6 percent, led by mining and quarrying, construction, manufacturing,  financial, insurance, real estate and professional services, and agriculture. Moreover, the GDP growth for FY19 has been revised down to 6.1 percent from 6.8 percent, led by private consumption.
Aditi Nayar, Principal Economist, ICRA

Savings And Investments

In 2018-19, the savings rate and gross capital formation as a percentage of GDP fell, according to the first revised estimates.

  • Gross savings grew by 3.2 percent in FY19. Gross saving as a percentage of gross national disposable income for 2018-19 is estimated at 29.7 percent against 32 percent for 2017-18.
  • Gross capital formation grew by just 4.4 percent in 2018-19. Gross capital formation-to-GDP ratio fell to 32.2 percent for 2018-19 from 34.2 percent in 2017-18.

Household Savings

Apart from savings in physical assets, the savings condition of households largely deteriorated in 2018-19.

  • Gross financial savings as a percentage of the GDP fell to 10.5 percent in 2018-19 after picking up to 12.05 percent in 2017-18.
  • Net financial savings, which discounts for financial liabilities of the household, fell to 6.48 percent from 7.78 percent in the same duration.
  • Savings in physical assets as a percentage of the GDP, rose to 11.5 percent in 2018-19 compared to 11.2 percent in the preceding year.
  • Savings in the form of gold and silver ornaments as a percentage of the GDP, fell to 0.19 percent in 2018-19 from 0.24 percent.
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