GDP FY18 estimates are likely to grow at 6.5 percent

According to the Economic Research Department of State Bank of India (SBI), the GDP FY18 estimates are likely to grow at 6.5 percent compared to the growth rate of 7.1 percent in FY17.

As per the report authored by Group Chief Economic Adviser, SBI, Dr. Soumya Kanti Ghosh, the anticipated growth of real GVA at basic prices in FY17 is 6.1 percent against 6.6 percent in FY17. The CSO AE is slightly lower than RBI's projection of GVA of 6.7 percent for FY18.

With an estimated shelf-life for only two months, the CSO will release the first revised estimate of FY15, FY16 and FY17 on 31 Jan'18 and based on that today's estimate of GDP and GVA for FY18 would be revised further as second advance estimate for FY18 on 28 Feb'18 when the Q3GDP numbers will be released.

"We believe, GVA estimate for current fiscal is likely to trend higher when the 2nd revision comes. The final GVA estimate could be thus 6.3-6.4 percent or so. However, the pace of revision in GDP number will be lower than the GVA revision as the tax collection numbers for current fiscal, primarily GST may be even lower in current months reflecting lower GST rates," mentioned the report.

It added that the industry is expected to moderate to 4.1 percent in FY18, compared to last year's growth 5.6 percent in FY17, due to slow growth in manufacturing.

On the expenditure side, growth in gross final consumption expenditure has reduced significantly to 8.5 percent in FY18 compared to 20.8 percent in FY17.

Focusing on the infrastructure push that has increased the construction activity, the report added that government has been spending a huge amount of money on Infrastructure in order to boost employment and provide renewed impetus to economic growth.

"Special thrust has been given to the key development sectors including Rural Roads, Housing, Railways, Power, Highways and Digital Infrastructure. The Capex target of Government of India for 2017-18 is Rs 3.09 lakh crore, which is 31.28 percent higher than last year. This is clearly visible in the GDP AE for FY18 data that construction grew by 3.6 percent compared to 1.7 percent in FY17," it added.