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Press Release: Mid-Year Review of the Economy 2016-17
November 5, 2016

“NCAER forecasts 2016-17 GDP growth at 7.6 percent”


NCAER’s 2016-17, Mid-Year Review of the Indian Economy 

The National Council of Applied Economic Research released its 2016-17 Mid-Year Review of the Indian Economy (MYR). The MYR presents the most comprehensive, independent assessment of the Indian economy as the Indian Government and its Ministry of Finance begin preparation of the FY 2017-18 Union Budget.  . The MYR remains a tribute, in a long standing partnership with the India International Centre to one of India’s most prominent post-Independence economists, Dr Malcom S. Adiseshiah.


Key highlights of the MYR:


GDP Growth: NCAER places overall 2016-17 GDP growth (GDP at market prices), in constant 2011–12 prices, at 7.6%. On one hand, the anticipated improvement in the agricultural sector and the associated increase in rural demand will give an upward push to economic growth. The manufacturing sector is also giving positive signals with the Purchasers’ Managers Index and Index of Industrial Production for core sectors and auto sales going up. The domestic aviation sector growth continues to be robust. However, other service index indicators continue to be muted.  Food inflation is also showing signs of dampening in the latter part of the second quarter.  However, fuel inflation may revive. Although urban demand is predicted to remain strong, external demand continues to be volatile. 


Agriculture: Unlike the past two years, this year witnessed a normalisation in rainfall at just short of the 100% long period average. The actual rainfall measured as an index on the basis of un-irrigated area under foodgrains as weights was 1.5 per cent above its normal level. Consequently, the area under kharif sowing is about 3.5% more than last year, with the sowing of pulses being about 29.1% more than last year. Thus, our estimates show that the output of kharif foodgrains is expected to reflect an increase of 10 per cent to 11 per cent over last year's output of 124 million tonnes.


Industry: The Index of Industrial Production (IIP), a measure of industrial performance, shows a negative growth of (–) 0.27% during April-August, 2016–17, as compared with 0.45% growth recorded during the same period of 2015–16. The Gross Fixed Capital Formation (GFCF), a key indicator of investment in the economy, has shown a steady and precipitous fall since the second quarter of 2015–16. In the first quarter of the current fiscal 2016–17, the GFCF touched (–) 3.1%. The core sector showed a year-on-year (y-o-y) growth of 4.6% in 2016–17:H1 versus 2.6 per cent in 2015–16:H1. Six out of eight industries showed higher growth in the 2016–17:H1 as compared to the corresponding period in the last fiscal. The two major components of IIP by economic activities, i.e., Mining and Quarrying (0.6% in 2016 versus 1.4% in 2015) and Manufacturing (-1.2% in 2016 versus 4.5% in 2015) show lower rates of Download pdf