GDP Q3FY19 lowest in 5 quarters; these sectors will drag India’s GDP lower to 7% for FY19

The India’s Gross Domestic Product (GDP) slowed down to 6.6% in December 2018 (Q3FY19) quarter. This would be lower compared to growth rate of 7.7% witnessed in the corresponding period of previous year, and also down from 7% of Q2FY19. With this, the country’s GDP is lowest in five quarters, the last time it was at 6.8% rate in September 2017 quarter. However,  in Q3FY19, price of GDP was at Rs 35 lakh crore as against Rs 32.85 lakh crore seen in Q3FY18. A Reuters poll of economists had forecast a growth of 6.9%  for the December quarter, compared with a downwardly revised 7.0% rise in July-September.

Going forward, the Central Statistics Office (CSO) has revised its GDP target for entire fiscal FY19 to 7% which will be lower on yearly basis.

CSO  said, “Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in the year 2018- 19 is likely to attain a level of Rs 141.00 lakh crore, as against the First Revised Estimate of GDP for the year 2017-18 of Rs 131.80 lakh crore, released on 31st  January 2019. The growth in GDP during 2018-19 is estimated at 7% as compared to the growth rate of 7.2% in 2017- 18.”

On  the other hand, real GVA  is anticipated to increase from Rs 121.04 lakh crore in 2017-18 to Rs 129.26 lakh crore in 2018-19. Anticipated growth of real GVA at Basic Prices in 2018-19 is 6.8% as against 6.9% in 2017-18.

source: tradingeconomics.com

According  to CSO estimate, there are few sectors which are seen to underperform, hence dragging down the GDP growth in FY19. Let’s find out what they are!

Agriculture!

GVA  at Basic Prices for 2018-19 from ‘Agriculture, Forestry and Fishing’ sector is estimated to grow by 2.7%  as compared to growth of 5% in 2017-18.

The  GVA estimates of this sector have been compiled using the Second Advance Estimates of production of Crops for 2018-19, furnished by the Department of Agriculture, Cooperation & Farmers Welfare (DAC & FW).

Mining and Quarrying! 

The growth in the GVA at Basic Prices for 2018-19 from ‘Mining and Quarrying’ sector is estimated to be 1.2% as compared to growth of 5.1% in 2017-18.

The  key indicators of Mining sector, namely, Production of Coal, Crude Oil and Natural Gas registered growth rates of 7.8%, (-) 3.7%, (-) 0.2% during April-December, 2018-19 as compared to 1.5%, (-) 0.4% and 3.4% during  April-December, 2017-18. 

Manufacturing!

The growth in the GVA at Basic Prices for 2018-19 from ‘Manufacturing’ sector is estimated to be 8.1% as compared to growth of 5.9% in 2017-18.

CSO said, “ The Private Corporate sector growth (which has a share of over 75% in the Manufacturing sector) was estimated from available data of Listed Companies with BSE and NSE.”

IIP  from Manufacturing sector registered a growth rate of 4.7% during April-December 2018-19. The Wholesale Price Index (WPI), in respect of the manufactured products registered a growth of 4.1% during April-December, 2018-19 as compared to 2.6%  during April-December, 2017-18.

Electricity, Gas, Water Supply and Other Utility Services! 

GVA  at Basic Prices for 2018-19 from ‘Electricity, Gas, Water Supply and Other Utility Services’ sector is estimated to grow by 8.0% as compared to growth of 8.6% in 2017- 18.

IIP of Electricity registered a growth rate of 6.4% during April-December, 2018-19 as compared to growth of 5.1% during April - December, 2017-18.

Construction!

GVA  at Basic Prices for 2018-19 from ‘Construction’ sector is estimated to grow by 8.9% as compared to growth of 5.6% in 2017-18.

Key indicators of Construction sector, namely, Production of Cement and Consumption of finished Steel registered growth rates of 13.9% and 8.4%, respectively, during April-December, 2018-19 as compared to 2.4% and 7.5% respectively, during April-December 2017-18.

Trade,  Hotels, Transport, Communication and Services related to Broadcasting! 

GVA at Basic Prices for 2018-19 from this sector is estimated to grow by 6.8% as compared to growth of 7.8% in 2017-18. GVA from Trade sector is estimated using an index of turnover based on Sales tax.

Financial, Real Estate and Professional Services! 

GVA  at Basic Prices for 2018-19 from this sector is estimated to grow by 7.3% as compared to growth of 6.2% in 2017-18. Major component of this industry is the real estate and professional services which has a share of 72.0%.

Public Administration, Defence and Other Services! 

GVA at Basic Prices for 2018-19 from this sector is estimated to grow by 8.5% as compared to growth of 11.9% in 2017-18.