New Delhi, Jan 5 (IANS) While the Indian economy is expected to perform better in the second half of this fiscal, the twin impact of demonetisation and GST implementation is estimated to pull down GDP growth to 6.5 per cent in 2017-18, from 7.1 per cent in the previous year, Chief Statistician T.C.A. Anant said on Friday.
Releasing the Central Statistics Office's (CSO's) first advance estimate for Indian Gross Domestic Product (GDP) growth rate in 2017-18, Anant said their projections for the entire fiscal showed that the nominal GDP calculated at market prices is expected to grow at 9.5 per cent, which is lower than 11.75 per cent estimated in the Union Budget presented last February.
The nominal GDP will be used as the benchmark for most indices in the forthcoming Union Budget to be presented on February 1.
"Implicit calculation suggests growth in the second half of 2017-18 will be better than the first. For the next two quarters, we have projected a growth 7 per cent... so the increase of Q2 will be maintained," he told reporters here.
"Number of figures had come in low for the first quarter for the GDP coming in lower at 5.7 per cent because of industry reaction in anticipation of GST (Goods and Services Tax) coming in," the CSO said.
Businesses going into a "de-stocking" mode on inventories in anticipation of the GST rollout from July and sluggish manufacturing growth pulled down the Indian economy's growth during the first quarter of this fiscal to 5.7 per cent, clocking the lowest under the Narendra Modi dispensation.
Breaking a five-quarter slump, a rise in manufacturing sector output, however, pushed the growth rate higher to 6.3 per cent during the second quarter (July-September) of 2017-18.
CSO data showed that in the first half (April-September) of the financial year, the economy grew at 6 per cent, indicating that it will accelerate in the second half (October-March).
Anant said that with more corporate data now being available since the second quarter, including the GST collections for November, although GDP is estimated to grow further, the dampening effect of the first quarter's fall would pull down the growth rate for the full year.
He also indicated that the government could find it difficult to achieve its fiscal deficit target of 3.2 per cent of GDP.
"Assuming that budgetary targets will be met, which gave a fiscal deficit of 3.24 per cent, our figures estimate it to be at 3.29 per cent, which rounding off becomes 3.3 per cent," he said.
At the time of releasing the second quarter GDP data in November, Anant had said: "GST has brought in a number of uncertainties because of tax for the period not being paid on time. The government has extended the deadlines for filing GST returns, so the tax data for the relevant period is still coming in."
