The demonetization effect and the resultant slowdown in household spending and corporate investment were evident in the fall in GDP growth estimates released by the government today. The GDP growth for the Financial Year 2017 (FY17) was reported at 7.1% while for the fourth quarter of the Financial Year 2017, the GDP growth stood at 6.1%. The growth of the farming sector stood at 5.2% for the fourth quarter FY17 while for manufacturing sector it was 5.3%.
The GDP growth data for 2016-17 factors in the rebased index of industrial production (IIP) and wholesale price index (WPI) data. Earlier this month, new sets of IIP and WPI data, with the base year changed to 2011-12 from the earlier 2004-05, were released. New categories of goods were added and weightages were also changed to bring the two indices more in tune with current consumption trends.
Growth in Gross Value Added (GVA) in the fourth quarter FY17 was 5.6% versus 8.7% in the corresponding quarter in the previous fiscal, while in the third quarter FY17, GVA growth was 6.7% versus 7.3% in the third quarter of FY16.
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In the second advance estimates released in February, the government had estimated that the growth in GVA, which is GDP minus net taxes, will slow down to 6.7 percent in 2016-17 or 1.1 percentage points lower than 7.8 percent GVA growth in 2015-16.
For the entire FY17, GVA in mining was at 1.8% falling sharply versus the 10.5 % recorded in FY16, while that for agriculture was at 4.9% in comparison to the 0.6% registered in FY16. Similarly, GVA for construction sector for the entire Financial Year 2017 was at 1.7% versus the 5% recorded in FY16, while for real estate sector GVA for the entire FY17 stood at 5.7% versus the 10.8% registered in FY16.
The GDP growth in FY16 revised to 8% from the 7.9% recorded earlier. FY15 GDP growth was revised to 7.5% from the previously recorded 7.2%. Similarly, FY14 GDP growth was revised to 6.4% from the 6.5% recorded earlier.