India's GDP will grow at 5 per cent in FY20, the government said on Tuesday. The Central Statistics Office's (CSO) fresh data suggests that the 2019 Economic Survey's estimates of 7 per cent are unlikely to be met. In FY19, GDP grew at 6.8 per cent.
At 5 per cent, India now sputters on at less than half its potential, calling on Finance Minister Nirmala Sitharaman to intensify efforts and lift the country out of its slump.
Tuesday's estimates are perceived to be closer to reality as they were compiled by extrapolating real-time data of high-frequency indicators for the first seven months of the fiscal. These include IIP data between April and October 2019 and financial performance of private listed companies till September 2019.
Alarmingly, nominal GDP, evaluated at current prices, is pegged at 7.5 per cent in FY20 as against a tigerish high of 11 per cent witnessed in the previous years. The single-digit nominal growth implies that the cherished goal of $5 trillion may lose its sway and a much faster nominal growth is needed to clothe the bare bones of the economy.
As per the CSO's latest estimates, which are in line with the RBI's read of the economy, the real GDP is likely to be Rs 147.79 lakh crore as against Rs 140.78 lakh crore registered in the previous year, while gross value added (GVA) will grow at 4.9 per cent in FY20, significantly lower than 6.6 per cent in FY19.
Of the eight broad parameters used in measuring national output, all but two (namely mining and public administration) are growing at a slower pace during the current fiscal over the previous financial year. For instance, manufacturing is witnessing the sharpest correction from 6.9 per cent growth in FY19 to 2 per cent in FY20.
Similarly, if electricity, gas and other utility services grew at 7 per cent in FY19, this fiscal, they are projected to grow at 5.4 per cent. Ditto with financial, real estate and professional services, which are growing at 6.4 per cent as against 7.4 last year.
Government Final Consumption Expenditure or government spending is pegged at Rs 24.34 lakh crore this fiscal as against Rs 21.35 lakh crore in FY19. At current and constant prices, they are estimated at 11.9 and 11.3 per cent respectively during FY20, as against 11.2 and 10.7 per cent respectively in FY19.
Similarly, private final consumption expenditure is estimated at 60.2 and 57.4 per cent respectively in FY20 as against 59.4 per cent and 56.9 per cent respectively in FY19.
Gross Fixed Capital Formation or investments are expected to see a modest growth at Rs 57.42 lakh crore in FY 20 as against Rs 55.70 lakh crore in FY19.