Govt revises GDP growth rate in India downward: 6 must-know things

Feb 03 2014, 14:52 IST
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Interestingly, the nominal GDP for FY13 has been revised upward to 12.2% from 11.7% earlier. (AP) Interestingly, the nominal GDP for FY13 has been revised upward to 12.2% from 11.7% earlier. (AP)
SummaryThe revision in GDP growth rate in India brings more gloom to the economy.

The revision in GDP growth rate in India brings more gloom to the economy. In black and white, get up-to-speed with the 'event' as well as the outlook.

1. On the one hand, GDP number for FY11 and FY13 stands revised downwards to 8.9% & 4.5% from the earlier estimate of 9.3% & 5.0%, respectively. Now, Indian economy has two sub-5% growth years in succession.

2. Interestingly, the nominal GDP for FY13 has been revised upward to 12.2% from 11.7% earlier.

3. Thus, for FY13, real GDP has been revised downward while nominal GDP has been revised upward.

4. On the other hand, FY12 GDP figure is revised upwards to 6.7% from 6.2%, primarily due to sharp upward revision in industry segment to 7.8% from 3.5%.

5. Both Savings and Investment rates declined in FY13 as compared to FY12, which is a major concern. Savings rate of 30.1% in FY13 is the lowest in last 9 years (FY04: 29.0%).”

6. Outlook: We don’t see any upward revision in FY13 data in its subsequent revisions. In FY14, we also expect GDP growth at 4.8% with a downward bias.

By Dr. Soumya Kanti Ghosh, Chief Economic Adviser, Economic Research Department, State Bank of India

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The revision in GDP numbers brings little cheer and more gloom for Indian economy. On the one hand, GDP number for FY11 and FY13 is revised downwards to 8.9% & 4.5% from the earlier estimate of 9.3% & 5.0%, respectively. Interestingly, the nominal GDP for FY13 has been revised upward to 12.2% from 11.7% earlier. Thus for FY13, real GDP has been revised downward while nominal GDP has been revised upward. On the other hand, FY12 GDP figure is revised upwards to 6.7% from 6.2%, primarily due to sharp upward revision in industry segment to 7.8% from 3.5%. We don’t see any upward revision in FY13 data in its subsequent revisions. In FY14, we also expect GDP growth at 4.8% with a downward bias. Hence, now with today’s release, Indian economy has two sub-5% growth years in succession. Both Savings and Investment rates declined in FY13 as compared to FY12, which is a major concern. Savings rate of 30.1% in FY13 is the lowest in last 9 years (FY04: 29.0%).

Revision in Annual GDP Numbers

* CSO today released revised estimate (RE) of GDP for the last three fiscal years (FY11, FY12 & FY13).

* For FY13, the first RE of GDP

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