Mumbai, January 8: It is now official that the Indian economy is slowing down. The data on advance estimate on the growth of economy by government’s Ministry of Statistics and Programme Implementation (Mospi) on Tuesday said that India’s GDP growth during the fiscal 2019-20 is expected at 5 per cent as compared to 6.8 per cent in year-ago period.
However, the bad news is not over yet. The private sector’s estimate is that the Economy will grow at even lesser rate than what Government’s advance estimate suggests. They said the final Gross Domestic Product (GDP) growth for 2019-20 will be at 4.6 per cent.
Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI said, “The FY20 GDP estimate as released by CSO pegs the GDP growth rate at 5 per cent, which we had already revised to 5 per cent in our GDP projection in Nov’19, is at a 11 year low. Nominal GDP growth at 7.5 per cent is a 42 year low. We are now revising our GDP projection for FY20 to 4.6 per cent based on current available trends. It is likely that the 40 basis points (bps) downward revision could be spilt over Feb and May’20 in equal proportion”.
Nikhil Gupta, Chief Economist, Motilal Oswal Financial Services said, “CSO puts advance estimate of FY20 real GDP growth at 5 per cent, same as that to RBIs but higher than our forecast of 4.6 per cent. Interestingly, CSO expects personal consumption growth to pick up from 4.1 per cent in 1HFY20 to 7.3 per cent in 2HFY20, which certainly seems optimistic to us. Surprisingly CSO also expects Government consumption to continue to grow strongly at 8.5 per cent in 2HFY20, which seems challenging considering massive receipt shortfall”.
Mospi said, Estimated growth of real Gross Value Added (GVA) in 2019-20 is 4.9 per cent as against 6.6 per cent in 2018-19. The manufacturing sector is expected to grow at 2 per cent in 2019-20 as compared to 6.9 per cent in the previous year.
The per capita income in real terms (at 2011-12 prices) during 2019-20 is likely to attain a level of Rs 96,563 as compared to Rs 92,565 for the year 2018-19. The growth rate in per capita income is estimated at 4.3 per cent during 2019-20, as against 5.6 per cent in the previous year, the Mospi statement said.
Gross Fixed Capital Formation (GFCF) at current prices is estimated at Rs 57.42 lakh crore in 2019-20 as against Rs 55.70 lakh crore in 2018-19. Agriculture sector is expected to see a growth of 2.8 per cent as compared to 2.9 per cent in the previous year.
The release of second advance estimates of quarterly GDP estimate for the third quarter (October-December) 2019-20 will be on February 28. The estimates are based on the growth numbers of the first two quarters of the current fiscal as well as other higher frequency data.
Economic growth slowed to over a six-year low of 5 per cent in the first quarter and to 4.5 per cent in the second quarter. The Reserve Bank of India in its December policy had revised GDP growth downwards to 5 per cent for 2019-20 from 6.1% in its October policy.
GDP growth stood at 4.8 per cent for the first half of the current fiscal year. India needs to grow at around 8 per cent a year to create enough jobs for the millions of young people joining the labour force each year.