In what could be a blip in the NDA government’s second anniversary celebrations, economic growth in 2015-16 may not have been as strong as projected due to sluggish industrial recovery and muted pick-up in private investment.

While the Advance Estimates of the Central Statistics Office (CSO) that was released in February this year had pegged gross domestic product (GDP) growth in 2015-16 at 7.6 per cent, economists have forecast that it could be marginally lower between 7.4 per cent and 7.5 per cent because of weaker growth in the fourth quarter of the fiscal.

“There is likelihood of a somewhat downward reduction. The industry has performed much weaker than expected in the fourth quarter,” said DK Joshi, Chief Economist, Crisil, adding that the agency has not made any concrete projection. The CSO will release the GDP estimate for the quarter January-March 2016 and the provisional annual estimates for 2015-16 on May 31.

This will not only give the government a chance to review its economic goalposts for the current fiscal but will also be one of the crucial and last sets of data before the Reserve Bank of India decides on its policy stance for the second bi-monthly monetary policy on June 7. Aditi Nayar, Senior Economist, ICRA, said that along with the expectation of muted fourth quarter data, there may be some revisions to the data for earlier quarters. “We estimate growth of gross value added at 7.2 per cent and GDP at 7.4 per cent for 2015-16,” she said.

HDFC Bank, too, said GDP growth for 2015-16 would be slightly lower at 7.5 per cent but the GVA (gross value added) growth is still in line with CSO’s projection of 7.3 per cent. “The acceleration in private consumption in the fourth quarter may not be as strong as the CSO estimate. Also, the January to March Index of Industrial Production was lower than market expectation at 0.2 per cent. The only silver lining could be a sharp boost in government expenditure,” Tushar Arora, Senior Economist, HDFC Bank. Similarly, India Ratings also pegged GDP growth marginally lower at 7.5 per cent and said the fourth quarter growth is likely to be 7.4 per cent as against the CSO estimate of 7.6 per cent.

GDP growth in the third quarter of the last fiscal was muted at 7.3 per cent compared with growth of 7.6 per cent and 7.7 per cent in the first and the second quarter of the fiscal, respectively.

Fiscal deficit

But, in some comfort for the government, the Centre’s fiscal deficit is not likely to be impacted by the lower than estimated GDP growth.

The Centre had projected the fiscal deficit at 3.9 per cent of the GDP in 2015-16. The Finance Ministry had said last month that this target had been met.