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In what has come as a big surprise a day before the Modi government presents its last budget for the current term, data released by the Central Statistics Office (CSO) on Thursday showed that the GDP growth in 2016-17 (the year of demonetisation) and 2017-18 (the year of GST implementation) was higher than earlier projected.
According to the CSO’s revised numbers, in 2017-18, the GDP grew at 7.2 per cent, 50 basis points higher than the 6.7 per cent estimated earlier. The main reason for this bump-up is the sharp upward revision in the Gross Value Added (GVA) for 2017-18: 6.9 per cent from the earlier provisional level of 6.5 per cent.
In the case of 2016-17, the year of demonetisation, the economic growth has now been revised upward to 8.2 per cent from 7.2 per cent estimated earlier.
However, the GDP growth for 2015-16 has been lowered to 8 per cent from 8.2 per cent earlier.
“The real GDP or the GDP at constant (2011-12) prices for 2017-18 and 2016-17 stand at ₹131.80 lakh crore and ₹122.98 lakh crore, respectively, showing growth of 7.2 per cent during 2017-18 and 8.2 per cent during 2016-17,” the CSO said.
Savings rate
The CSO’s revised data also showed that savings rate in the economy remained almost flat at 30.1 per cent in 2017-18 compared with 29.9 per cent estimated earlier.
Reacting to the CSO announcement, Madan Sabnavis, Chief Economist, CARE Ratings, told BusinessLine that the revised GDP growth numbers are quite surprising as they change the narrative that has been under discussion in the last two years.
‘Numbers don’t gel’
“This good performance of 8.2% and 7.2% in the last 2 years does not gel well with either the corporate results that we have witnessed or the relentless pressure on the SMEs for which the government has announced various measures. Such wide revisions also make one more cautious when looking at advance estimates,” he said.
It may be recalled that the CSO had, in its advance estimates, pegged the GDP growth for 2018-19 at 7.2 per cent
Thursday’s GDP revision comes against the backdrop of the row over unreleased NSSO numbers, which showed the unemployment rate at a 45-year high.
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