Chennai: Estimates made by global bodies and expert firms on India’s economy were in the wrong as the Central Statistics Office (CSO) deferred from their viewpoint, revising the GDP growth forecast to lesser than what was projected earlier.
The CSO pegged the GDP growth forecast for 2018-19 to seven per cent from 7.2 per cent projected earlier. It estimated the India’s economy to have grown at 6.6 per cent in the December quarter (Q3), lower than estimates made earlier and the slowest in five quarters.
The GDP data for Q1 (April-June) and Q2 (July-September) were also revised to eight per cent and seven per cent, respectively.
However, India retained its tag as the fastest growing economy, having beaten China in the race. China grew by 6.4 per cent in the December quarter.
As per the report, agriculture is estimated to grow at 2.7 per cent, while manufacturing is expected to accelerate to 8.1 per cent in 2018-19. However, trade, hotel and transportation sector is expected to decelerate to 6.8 per cent during the year.
CSO data released earlier this month showed consumer price index (CPI), a measure of retail inflation, stood at 2.05 per cent in January. India’s factory output, measured by index of industrial prodcution (IIP) recovered to 2.4 per cent in December from 0.3 per cent in November.
On 7 February, Reserve Bank of India’s (RBI) monetary policy committee (MPC) cut the repo rate by 25 basis points and changed its policy stance to ‘neutral’ from ‘calibrated tightening’, taking into consideration the benign headline retail inflation and threat of a global slowdown.
“The decisions of the MPC in this regard will be data-driven and in consonance with the primary objective of monetary policy to maintain price stability while keeping in mind the objective of growth,” RBI Governor Shaktikanta Das had said about the rate cut.
India’s retail inflation slowed to a 19-month low in January, while factory output remained subdued in December, dragged down by a negative base effect. This gave the central bank space to effect a rate cut.