By Devanshee Dave
The recent estimates announced by the Central Statistical Organization (CSO) in its Second Advance Estimates report are in line with what the Ministry of Finance predicted in its earlier Economic Survey. The overall scenario suggests upward positive movement in the Indian economy, which will put the country on the path to further economic growth.
The announcement
According to the data released by CSO, estimates for real Gross Domestic Product (GDP) growth have been marked upward to 6.6 percent, which is slightly up from the 6.5 percent predicted in the First Advance Estimates. GDP growth for the third quarter is estimated to be at 7.2 percent, which is an increase of 0.7 points from the second quarter. In addition, real GVA growth is also expected to be at 6.7 percent in the quarter ending in December. This number stood at 6.2 percent in the second quarter of the current financial year. Apart from this, the overall real GVA growth for the financial year 2017-18 has been revised from 6.1 percent to 6.4 percent.
The manufacturing sector has also witnessed a sharp growth of 1.2 points. Its growth was pegged at 6.9 percent in the second quarter, from which it has grown to an impressive 8.1 percent. Growth in the construction sector is also up, by 2.8 percent in Q3. The service sector’s growth stood at 7.2 percent in the Q2 of the current financial year, and is estimated to rise to 7.7 percent in Q3.
According to an article in The Economic Times, there was also impressive growth in the output of cement, which rose to 20.7 percent in January. The Finance Ministry claimed in a statement that the growth in these sectors represents a turnaround in the country’s economic growth momentum.
The investment momentum
The Real Gross Fixed Capital Formation—which is a measure of investments—rose by a full 7.6 percent in the third quarter. This rate was recorded at 6.9 percent in the second quarter, and the third quarter rate stood at 12 percent. In addition, there was a growth rate of 16.4 percent in the output of capital goods at the end of December last year. As a proportion of GDP, gross capital formation is estimated to have been 31.4 percent in the financial year 2017-18 and 30.3 percent in 2015-16.
As claimed by the Finance Ministry, the growth acceleration seen in various sectors, especially in construction and manufacturing, has the potential to change the current trajectory of the Indian economy.
The improvement which has already seen in gross capital formation states has created a good situation for making investments. The Indian financial market is currently facing a market correction; however, the numbers show a positive future for the investment climate. In its latest budget, the Finance Ministry set a deficit target of 3.5 percent for the current financial year and aims to cut this down to 3.2 percent. This target may appear quite tricky at the moment, but achieving it would greatly benefit the Indian economy and lead to further growth.
Featured Image Source: MaxPixel
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