GDP grew 6.1% not 6.8% last fiscal but rose to 8.3 % in demonetisation year

National Statistical Office Friday revised India's GDP growth downwards for two financial years while increasing economic growth in year of demonetisation.

Illustration by Peali Dezine

New Delhi: The National Statistical Office (NSO) Friday revised India’s GDP growth downwards for two financial years, 2018-19 and 2017-18, while marginally increasing the country’s economic growth for 2016-17, in the year the Narendra Modi government had announced demonetisation.

The government pegged GDP growth for the financial year 2018-19 to 6.1 per cent from the earlier estimate of 6.8 per cent. For the financial year 2017-18, the GDP figures were also revised downwards to 7 per cent from 7.2 per cent.

For the financial year 2016-17, however, the growth projections were revised upwards to 8.3 per cent from 8.2 per cent.

Graph by Arindam Mukherjee

The changes in growth projections are likely to raise questions about the country’s statistical system. The Economic Survey 2019-20 released Friday also highlighted the need to invest in the country’s statistical infrastructure.

The sharp downward revisions in growth forecast for the year 2018-19 was mainly because the gross value added fell from 2.7 per cent to 1 per cent in the primary sector — comprising agriculture, forestry, fishing and mining and quarrying.

The NSO also said the downward trend was on account of the usage of updated estimates in the crop sector and horticulture production, forestry, fishing and aquaculture, and for mining and quarrying.

The gross value added in the secondary sector, comprising manufacturing, has also fallen to 6 per cent from the earlier estimate of 7.5 per cent on account of a revision in the institution-wise data.

The gross value added in the tertiary sector, meanwhile, increased marginally to 7.7 per cent from 7.5 per cent.

“The NSO has sharply scaled back the GVA [gross value added] growth for FY2019 to 6.0 per cent from the earlier 6.6 per cent, led by mining and quarrying, construction, manufacturing, financial, insurance, real estate and professional services, and agriculture,” said Aditi Nayar, principal economist at rating agency ICRA.

“The growth rates for FY2019 may well undergo additional changes once the data from the Annual Survey of Industries becomes available,” she added.

The NSO also justified the changes in data for the previous years by saying that the use of the latest available data from various agencies has resulted in changes in GVA and growth estimates.