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State of the Economy Seminar August 2017
August 24, 2017

NCAER Conference Room

New Delhi (Monday, August 27, 2017): NCAER forecasts growth based on both quarterly and annual models. The quarterly model forecasts that Gross Value Added at Basic Prices in (2011-12) prices will grow at 6.6 per cent in 2017–18.  For the first quarter it forecasts 5.6 per cent year-on-year growth.


NCAER retains its forecast of a growth of 7.3 per cent for 2017–18 from the last quarter for GVA (Gross Value Added) at basic prices. These forecasts at constant (2011–12) prices are based on NCAER’s annual GDP model.   


The forecast for the growth of Gross Domestic Product (GDP) at market prices in 2017–18 has, however, been reduced to 7.4 per cent at constant (2011–12) prices. Real agriculture GVA is forecast to grow at 3.8 per cent, real industry GVA at 6.3 per cent, and real services GVA at 8.5 per cent in 2017–18. The Wholesale Price Index (WPI) inflation is projected at 6.7 per cent for 2017–18. The growth rates in exports and imports, in dollar terms, are estimated at 6.9 per cent and 7.0 per cent, respectively, in 2017–18. The current account balance and central fiscal deficit, as percentages of GDP, are projected at –1.0 per cent and 3.2 per cent, respectively, for 2017–18. These estimates have been revised upwards from February 2017.


In the agricultural sector, the fourth advance estimates of crop output released on August 16, 2017, reveal that the total output of food grains during 2016–17, estimated at 275.7 million tonnes, touched a new record as compared to the earlier record of 265.0 million tonnes achieved in 2013–14. The situation with regard to rainfall until the middle of August 2017 indicates that of the four main regions of the country, only two (east and north) have so far experienced normal rainfall.  Several sub-divisions of the other two regions - western region and southern region have witnessed deficient rainfall. Further, for the country as a whole, of the total 36 sub-divisions, about a little over a quarter (28 per cent) have experienced deficient rainfall. In contrast, last year saw a much better monsoon rainfall. However, a comparison over the last five years shows that the rainfall situation in 2017–18 is better than that witnessed in 2012–13, 2014–15, and even in 2015–16. Going forward, forecasts by the Meteorological Department suggest that the second half of the southwest monsoon season (August–September) is likely to see normal rainfall (94 per cent–106 per cent of the Long Period Average) in the country as a whole. If they turn out to be true, these forecasts could prove to be a boost for the economy, in general, and the agricultural sector, in particular.


As regards the industrial sector, the Index of Industrial Production (IIP) of this quarter (April–June) exhibited weak growth, especially in the month of June 2017, recording a massive decline in the growth rate from over 7 per cent in 2016–17: Q1 to just 2 per cent in 2017–18: Q1. The use-based classification of all the six categories of goods, that is, primary goods, capital goods, intermediate goods, infrastructure/construction goods, consumer durables, and consumer non-durables, shows that except for consumer non-durables, all other categories showed a significant slowdown in 2017–18: Q1  as compared to 2016–17: Q1,  Consumer non-durables, on the other hand, attained a growth of 7.7 per cent in the first quarter of 2017–18, which was marginally higher than the corresponding figure of 7.6 per cent in the same quarter of 2016–17.<