While Gross Domestic Product (GDP) growth has taken a hit in 2017-18, the government hoping it would remain above seven per cent from the final quarter (January-March) of the current financial year onwards.
After a big hit on industrial growth due to the introduction of the goods and services tax regime, the current financial year is now expected to see economic growth of 6.5 per cent.
On Friday, the government said it expected economic growth at current prices to slow down from the 7.1 per cent of the previous financial year.
In manufacturing, growth in gross value added was 4.6 per cent, reflecting the latest industrial growth figures, said chief statistician T C A Anant at a press conference. He added that manufacturers had anticipated the GST introduction from July 1 and a slowdown was a result.
In the current financial year, economic growth had started off low at 5.7 per cent in the first quarter (April-June), followed by a 6.3 per cent increase in the second quarter. The government expects growth above seven per cent in succeeding quarters.
On lower agricultural growth, Anant pointed to 'a certain amount of statistical base reversion to mean'. "Last year there was a very high growth rate, coming off consecutive years of drought. However, in production terms, volume is expected to be the second highest in 2017-18 in a long period of time or maybe ever," he added.
He said the latest growth figures were, in fact, lower than the finance ministry's nominal expectations for the current financial year, as had been presented in the earlier Union Budget. However, economic trends pointed to higher growth in the coming quarters.
NITI Aayog vice-chairman Rajiv Kumar picked up on this theme, saying growth could be expected to strengthen in the coming period. For instance, he said, the manufacturing PMI index for December was at a five-year high of 54, while demand in the fast moving consumer goods segment was picking up briskly.
Kumar added that the higher second-half growth was despite a weaning of public sector expenditures, which had peaked in 2016-17 due to implementing the pay commission report.
Gross Fixed Capital Formation (GFCF) at constant (2011-12) prices is estimated at Rs 37.65 lakh crore in 2017-18 as against Rs 36.02 lakh crore in 2016-17. In terms of GDP, the rate of capital formation was 29 per cent, against 29.5 per cent in 2016-17.
In the second quarter, the rate of capital formation remained below 30 per cent, a third in a row. Anant had earlier said this figure had to be much higher to significantly set into motion long-term investment growth. This time, he said private expenditure needed to ramp up.