With slower pace of industrial production, the country’s first quarter gross domestic product (GDP) growth slowed to 7 per cent in the April-June quarter from 7.5 per cent in the previous quarter. The GDP growth data is calculated under the new methodology (GDP at market prices) that the Government’s statistics department moved to last year.
Experts are of view that the number is disappointing but said further details are needed in order to understand the data better. Reflecting a muted performance of industries’ output, it has been observed that there is a deceleration in farm, services and manufacturing sectors.
The Gross Value Added (GVA), a new concept introduced by CSO to measure the economic activity, also slipped during the first quarter to 7.1 per cent, from 7.4 per cent a year ago. The GDP grew at 7.5 per cent in the January-March quarter while it was 6.7 per cent in the April-June quarter last year, according to data from the Central Statistics Office (CSO).
The nominal GDP and GVA at current market price showed a steep decline in the quarter under review. The nominal GDP slipped to 8.8 per cent in Q1 from 13.4 per cent a year ago while the GVA growth rate nearly halved to 7.1 per cent from 14 per cent a year ago.
The Government towards the beginning of the fiscal has projected a growth rate of 8.1-8.5 per cent in the current fiscal, which may be difficult to achieve. The RBI, which has cut interest rate by 0.75 per cent in three tranches since January, is scheduled to announce the next bi-monthly policy on September 29.
The data showed that the manufacturing sector GVA at constant prices (2011-12) rose 7.2 per cent in the April-June quarter as against 8.4 per cent in the year-ago period.
Similarly, the growth in the output of electricity, gas, water supply and other utility services decelerated sharply to 3.2 per cent as against 10.1 per cent a year earlier. The farm and allied sectors grew at 1.9 per cent, down from 2.6 per cent in the previous year.
The output of mining and quarrying sector too slipped marginally to 4 per cent, from 4.3 per cent a year ago. Financial, real estate and professional services growth shrank to 8.9 per cent as against 9.3 per cent a year earlier. However, the construction activity registered an increase of 6.9 per cent, up from 6.5 per cent in the previous year.
According to the CSO data, GDP at constant (2011-12) prices in Q1 of 2015-16 is estimated at Rs 27.13 lakh crore, as against Rs 25.35 lakh crore in Q1 of 2014-15, a growth of 7 per cent. Quarterly GVA at basic price at constant (2011-2012) prices for Q1 of 2015-16 is estimated at Rs 25.80 lakh crore, as against Rs 24.10 lakh crore in Q1 of 2014-15.
The GDP figure is derived by adding taxes and net subsidies to GVA at basic prices. The GDP at current prices in Q1 of 2015-16 is estimated at Rs32.43 lakh crore, as against Rs29.80 lakh crore in the same period a year ago, a growth rate of 8.8 per cent. The GVA at Basic Price at current prices in the said period is estimated at Rs30.30 lakh crore as against Rs28.28 lakh crore last year, showing an increase of 7.1 per cent.
According to the data, the Gross Fixed Capital Formation (GFCF) at current prices is estimated at Rs9.02 lakh crore in the said period as against Rs8.69 lakh crore in Q1 of 2014-15. At constant (2011-12) prices, GFCF is estimated at Rs8.07 lakh crore in Q1 of 2015-16 as against Rs7.70 lakh crore in Q1 of 2014- 15.
In terms of GDP, the rates of GFCF at current and constant (2011-12) prices during the first quarter are estimated at 27.8 per cent and 29.8 per cent, respectively, as against the 29.2 per cent and 30.4 per cent, respectively, in the June quarter of 2014-15.
The Government Final Consumption Expenditure (GFCE) at current prices is estimated at Rs 3.86 lakh crore in the first quarter as against Rs 3.71 lakh crore in the year-ago period.
At constant (2011-12) prices, GFCE is estimated at Rs3.10 lakh crore in Q1 of 2015-16 as against Rs3.06 lakh crore a year ago. In terms of GDP, rates of GFCE at current and constant (2011-12) prices during the June quarter are estimated at 11.9 per cent and 11.4 per cent, respectively, as against the 12.4 per cent and 12.1 per cent in the same quarter a year earlier.