The annual GVA growth rate of the manufacturing sector is expected to fall from 6.9 per cent to a mere 2 per cent in the current fiscal.
Manufacturing and construction sectors are likely to pull down India’s economy this year as the government projects a severe fall in their growth rates. The annual GVA growth rate of the manufacturing sector is expected to fall from 6.9 per cent to a mere 2 per cent in the current fiscal, according to the first advance estimates released by the Ministry of Statistics and Programme Implementation (MOSPI). Similarly, the construction sector’s GVA growth rate is also estimated to free fall from 8.7 per cent to 3.2 per cent this year. Overall the government estimates GVA to fall from 6.6 per cent to 4.9 per cent and GDP to fall from 6.8 per cent to 5 per cent.
The fall in the manufacturing sector is well explained by the three straight months of contraction until October 2019. IIP of manufacturing registered a growth of a mere 0.6 per cent during April-October, 2019-20. Other sectors that are projected to slow down in FY20 are agriculture, forestry & fishing; electricity, gas, water supply & other utility services; trade, hotels, transport, communication and services related to broadcasting financial; and real estate & professional services.
The fall in the growth of most of the sectors is also likely to hit the per capita income. “The per capita income at constant 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,” said MOSPI.
To compute the advanced estimates, a sector-wise benchmark indicator method is used, which is obtained by extrapolation of indicators like IIP of first 7 months of the financial year, financial performance of listed companies in the private corporate sector available up to the end of first half, 1st Advance Estimates of crop production, and the accounts of central & state governments, information on indicators like deposits & credits, etc. Meanwhile, with the introduction of Goods and Services Tax (GST) from July 2017 and subsequent changes in the tax structure, the total tax revenue used for GDP compilation includes non-GST revenue and GST revenue.