What will be India's advanced GDP numbers for FY18?

India’s GDP growth surged by 6.3% in the September quarter compared to 7.5% in the corresponding period of the previous year.

Prime Minister Narendra Modi at a press conference. Image Source: IANS

Key highlights:

CSO will be releasing the first advance estimates of GDP growth for 2017-18

Advance estimates will be crucial, considering the upcoming Budget 2018

Experts are still not convinced that the economy is moving on a sustainable path

The Central Statistics Office (CSO) will be releasing the first advance estimates of India's Gross Domestic Product (GDP) growth for 2017-18 at around 5.30 pm today.

GDP growth of two quarters for FY18, has already been released, and the government's projection for entire fiscal will reportedly depend on the indicators' performance during the 1HFY18.

Also, the advance estimates will be crucial, considering the country is just a few weeks away from the launch of Union Budget 2018.

Here's how the GDP performed in the first half of FY18.

Indian economy has shaken off the effects of demonetisation and GST rollout as the GDP growth surged by 6.3% in the September quarter compared to 7.5% in the corresponding period of the previous year. India’s economic growth had decelerated to three-year low of 5.7% in the June quarter.

source: tradingeconomics.com

Quarterly GVA at basic price is estimated at Rs 29.18 lakh crore as against Rs 27.51 lakh crore in Q2 of 2016-17, showing a growth rate of 6.1% from 5.6% in Q1FY18.

Industry sector was the sole best performer among GVA indicators. This sector grew at 5.8% in Q2 versus 1.6% in Q1FY18 due to growth recorded by mining at 5.5% (from -0.7% in Q1), manufacturing at 7% (from 1.2% in Q1), electricity, gas, water supply and other utility services at 7.6% (from 7% in Q1) and construction at 2.6% (from 2% in Q1.

Indicators like agriculture and allied activities and services sector moderated during Q2FY18.

Service sector came in at 7.1% in Q2 from 7.8% in Q1FY18 with trade, hotels, transport and communication services at 9.9% (from 11.1% in Q1), while financing, insurance, real estate and professional services remained at 5.7% (from 6.4% in Q1) and public administration, defence and other services at 6% (from 9.5% in Q1).

The agriculture and allied activities were at 1.7% in Q2FY18 compared to 2.3% in Q1FY18.

What do analysts expect?

Despite showing gradual rise in Q2FY18, experts are still not convinced that the country's economy is moving on a sustainable path.

Many rating agencies have trimmed down their GDP growth forecasts, with the latest one being Fitch Ratings which believes that Indian economy will grow to 6.7% in FY18 from earlier 6.9% citing weaker than expected rebound.

The US based agency stated that the GDP growth has "repeatedly disappointed" in recent quarters, partly because of one-off factors including the demonetisation programme of November 2016 and disruptions related to the implementation of the Goods and Services Tax (GST) in July 2017.

CRISIL too has projected India's GDP at 6.8% with downside bias from previous 7% for FY18.

The GDP which stood at 9.2% in FY16 dropped to 6.1% in FY17 and further to 5.7% in Q1FY18.

Anand Rathi agency said, "Yet, despite the acceleration, India is still growing well below the trend rate of the last decade.”

Morgan expects real GDP growth to accelerate to 7.5% in FY2019 and further to 7.7% in FY2020, from 6.7%Y in FY2018.

Fitch, however, expects GDP growth to pick up in the next two years on the back of gradual implementation of the structural reform agenda and higher real disposable income.