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State of the Economy Seminar July 2016
August 4, 2016

NCAER Conference Room


NCAER’S Quarterly Review of the Economy July 2016

NCAER predicts GDP will grow at 7.6 percent in 2016-17  

NCAER Team presented the Quarterly Review of the Economy at a seminar held at its Conference Room. The review covered the performance of the Economy in the first quarter of 2016-17 and forecast for the year head. The seminar also included a presentation by Andreas Bauer, Senior Resident Representative—India, Nepal, Bhutan on ‘’Global Outlook and the Brexit Impact.


Key Highlights


NCAER’s annual model for GDP market prices at constant (2011–12) prices forecasts a GDP growth rate of 7.6% for 2016-17. The Gross Value Added (GVA) at Basic Prices at constant (2011-12) prices is predicted to grow at 7.2% in 2016-17.  Real Agriculture GVA is forecasted to grow at 4.1%, real Industry GVA at 7.1% and real Services GVA at 7.9% in 2016-17.  Growth in exports and imports, in dollar terms, is projected at 2.5% and (-) 8.0%, respectively, while Wholesale Price Index (WPI) inflation is projected at 2.8% for 2016-17. The current account balance and fiscal deficit as percentage of GDP are projected at (-) 0.7% and 3.1%, respectively, for 2016-17.  


In the agriculture sector, a redeeming feature of 2015-16 was that despite deficiency in monsoon rainfall the overall output of food grains did not fall though output of commercial crops did suffer. During 2016-17 the South-west monsoon was deficient in June 2016 but in July 2016 there was a significant recovery though it still continues to remain spatially uneven as a quarter of the 36 sub-districts in India are still suffering from deficiency in rainfall. Though outlook for the second half of the monsoon season remains positive, which probably would dampen the price rise in 2016-17, which otherwise have witnessed a significant jump in the first quarter of this financial year. 


On the industrial sector front, the Index of Industrial Production (IIP) numbers show weak growth for the first two months of the current fiscal.  For April-May, 2016-17, it grew at -0.1 per cent on a year-on-year (y-o-y) basis, mainly driven down by slow and uneven growth in manufacturing (-1.5%).  Capital goods suffered double-digit fall in the first two months of the current fiscal indicating weak investment activity in the economy (-18.9%) on a y-0-y basis. Consumer durables growth continues to exhibit strong growth (8.9% on a y-o-y basis).  The index of eight core industries grew by 5.4% in 2016-