India Data Talk: The Central Statistical Organisation (CSO) has released the advance estimate of India’s gross domestic product (GDP) statistics for the fiscal year ended March 2013. The economy expanded by 4.96% at factor prices or 3.32% at market prices from a growth of 6.21% and 6.33% at factor and market prices respectively, during the fiscal year ended March 2012. India’s GDP growth rate has declined for two consecutive years from 9.32% during the fiscal year ended March 2011. As of the quarter ended December 2012, India saw real GDP growth of 4.47% year-on-year from 5.25% during the quarter ended September 2012.
Growth estimates by the CSO suggests that declining growth may be largely attributable to poorer growth of private final consumption expenditure which traditionally constitutes the lion’s share of India’s GDP. In real terms, India’s private final consumption expenditure growth halved to 4.14% during the 2012-2013 fiscal year from 7.97% during the previous fiscal year (or 12.85% during the 2012-2013 fiscal year from 16.24% during the previous fiscal year, in nominal terms).
Chart provided by: CEIC
India’s economic growth forecast from the 22nd round of the Professional Forecasters’ Survey (PFS) conducted during the quarter ended December 2012 falls below the 5.5% median growth. . Ran by the Reserve Bank of India (RBI), the 22nd round of PFS saw a downward revision in India’s projected growth rate owing to declining growth projected in the industrial and service sector based on a survey of 31 respondent forecasters. The present survey anticipates a 2.8% median growth in India’s industrial sector during the 2012-2013 fiscal year, a downward revision from the 4.0% median growth anticipated in the quarter ended June 2012. Similarly, the PFS revised their service sector growth forecast to a median of 7.4% during the quarter ended December 2012 from 8.0% during the quarter ended June 2012.
While the PFS projects a moderate recovery during the coming fiscal year (2013-2014) – especially in the industrial sector – poor outlook on external demand (owing to poor global economic outlook) and the sluggish pace of structural reforms and infrastructure improvements has seen growth forecast for the next fiscal year revised downwards to 6.5% from 7.0% projected during the quarter ended June 2012. Furthermore, weaker consumer sentiments and the tightening public finances may further hamper India’s scope for recovery during the coming fiscal year.
By Chan Yee Lui – CEIC Analyst