According to the NCAER’s mid-year review, service sector is doing well, but industrial production is down on all indicators across the board.
Projections by the National Council of Applied Economic Research (NCAER) show the Indian economy will grow at 6.2 per cent in 2017-2018. The mid-year review predicts that both the gross value added (GVA) at basic prices, and the gross domestic product (GDP) at market prices, will progress at this growth rate.
“With greater emphasis on improving ease of doing business, attracting foreign inflows, recapitalising public sector banks, and efforts to achieve continuous improvements on the GST front, the Indian industrial sector hopes to overcome its transition blues in 2018–19,” the economic think tank said.
Here are the key highlights of the review:
Agriculture
- Kharif output to rise from 2.1 per cent to 3.3 per cent due to good rainfall.
- Cotton and sugarcane to see a marginal growth this year.
Industry
- Index of Industrial Production grew by 2.2 per cent (year-on-year) between April and August 2017-18, as against 5.9 per cent in the same period in 2016-17.
- Manufacturing output showed the most significant slowdown from 6.1 per cent in 2016-17 (April to August) to 1.6 per cent in 2017-18 (April to August).
- Low investment scenario was shown by a steep decline in capital goods industry from 9.6 per cent in 2016-17 (April to August) to -1.9 per cent in 2017-18 (April to August).
- Consumer durables industries saw a decline from 6.2 per cent in 2016-17 (April to August) to -0.9 per cent in 2017-18 (April to August).
- Infrastructure industries slowed down from 5.4 per cent in 2016-17 (April to August) to 3 per cent in 2017-18 (April to August)
- Cement and fertiliser industries showed a steep fall, and are slipping into the negative zone.
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Services
- Aviation industries exhibited strong momentum — tourists arriving and revenue earning goods showed a higher growth in the first half of 2017-18 than in the previous year.
- International cargo traffic saw a jump of year-on-year growth from 8.1 per cent in 2016-17 (April to August) to 19.2 per cent in 2017-18 (April to August)
- Wholesale Price Index inflation grew from 0.2 percent in H1 2016-17 to 2.4 per cent in H1 2017-18.
Fiscal scenario
- Income Tax collection saw a positive and persistent growth in the post-demonetisation period.
- Contribution of the GST in total revenue stood at 22.7 per cent (approx) and 55.7 per cent in indirect tax collection till 2017-18 Q2.
- Higher revenue growth, along with a decline in total expenditure, has led to a decline in fiscal deficit.