According to the first advance estimates of national income for 2017-18, the growth in Real GDP is estimated at 6.5% as compared to the growth rate of 7.1% in 2016-17. While, the anticipated growth of real GVA at basic prices in 2017-18 is estimated at 6.1% as against 6.6% in 2016-17. Also, the growth rate in per capita income is estimated at 5.3% during 2017-18, as against 5.7% in the 2016-17.
Although the mining and construction sector are expected to grow at 2.9% and 3.6% respectively in FY 2017-18, however, the low growth figures for agriculture and manufacturing sector at 2.1% and 3.6% during the same year is worrisome.
United Nation in its report on World Economic Situation and Prospects 2018 has projected GDP growth is projected to accelerate from 6.7 % in 2017 to 7.2 % in 2018 and 7.4 % in 2019. However, Asian Development Bank has revised down the forecast for economic growth in 2017 to 6.7% from 7% and growth projection for FY2018 from 7.4% to 7.3%.
On the macro-economic front, some of the lead indicators have registered a growth. However, Index of Industrial Production (IIP) declined from 4.14% in September 2017 to 2.2% in October 2017. India’s merchandize exports rose in October 2017 to register a growth of 30.55% % after a significant fall of (-) 1.12% in September 2017. The core infrastructure grew 13 months high to 6.8% in November 2017 as against 5% in October 2017. On the inflation front, all-India general WPI inflation increased to 3.6% in October 2017 from 2.6% in September 2017. CPI inflation also increased marginally from 3.6% in October 2017 to 4.9% in November 2017. In the taxation segment, direct Tax collections up to November, 2017 show that net collections are at Rs. 4.8 lakh crore which is 14.4% higher than the net collections for the corresponding period of last year.
On the policy front, the cabinet approved slew of reforms including continuation of NLCPR scheme for North East till March 2020, approval for revised model concession agreement for PPP projects in major ports, scheme for capacity building in textiles sector (SCBTS), extension of term of the Commission to examine the issue of sub-categorization of Other Backward Classes, special package for employment generation in leather and footwear sector and continuation of Centrally Sponsored Scheme of National Ayush Mission (NAM).
Going forward, it is pivotal to improve and ease the hurdles faced by the business primarily in the process of starting a business and getting credit in order upscale manufacturing sector and to increase its share in GDP.
The excessive compliances and filings are increasing under various statutes are leading to inefficiencies in operations and thereby, increasing costs. It has particularly become very difficult for small business to comply with excessive increasing formalities under various laws. There is an urgent need to reduce the cost of borrowing as it is impacting the competitiveness of Indian Industry at the national and internal arena. Going ahead, it is suggested that the time bound implementation of reform measures at the grassroots level would be critical to push the economic growth to an unprecedented levels.
In the last, expectations from the much awaited Union Budget 2018-19 which would be announced on 1st Feb, 2018 by our Dear Jaitley Ji are very high. People are expecting reforms for infrastructure, housing for all, tax friendly regime majorly. Therefore, dream (not purposely dream rather hope) here is of a dynamic Budget, which, through effective policy interventions and reform initiatives, would consolidate the positives thereby paving the way for a return to high growth trajectory in the coming years.
Being an Economist, I hope that the forthcoming Budget would contain provisions which would sustain the growth momentum in the economy and build consensus towards speedy and purposeful implementation of the reform agenda. Despite the not-so impressive economic situation as represented by the advance estimates, the Government’s new unveiled initiatives in the form of FDI in retail, insurance, etc and fuel price hike are encouraging. Once implemented, they would yield the fruits and help kick start industry growth momentum. These have immense potential to enhance India’s growth potential by boosting productivity, investments and human capital. We believe that with the advent of these reforms, India could achieve double-digit growth on a sustained basis in the next very few years. These reforms will not just push growth, but also help India rebalance its economy on both the supply and the demand side.
About the author: Economist at heart, analyst by work. Facts intrigue me and so do numbers. Currently working at PHD Chamber of Commerce and Industry. Goes without saying that the articles are purely my thoughts with no connections to my workplace.