India Gross Domestic Product (GDP)

Economic growth slows down in Q2FY19, with Modi government preparing for elections next year.

Published monthly by CSO under the Ministry of Statistics and Programme Implementation. Updated until the July-September 2018 quarter. (Published on November 30, 2018)

Note: The data post-2011 Q2 is in the base year 2011-12. For data, before 2011 Q2 we (IMA) have used yearly growth rates for those quarters, obtained from a series on a different base year. For example, the GDP of 2011 Q2 (on 2011-12 base year) and its year on year growth rate (on 2004-05 base year) gives us the GDP of 2010 Q2 (on 2011-12 base year).

Recent Data Trend

India's economy grew moderately at 7.1% year-on-year (YoY) during Jul-Sep'18 (Q3 2018), after a robust growth of 8.2% YoY in the previous quarter. The Indian economy has shown a sustained acceleration in growth compared to 6.3% YoY growth in the corresponding period last year. The Indian economy in Q2FY19 expanded at a lower than expected rate of 7.5 % YoY (Bloomberg poll).

Capital investment as depicted by fixed capital formation, recorded an average growth of 11.2% YoY since the beginning of this year compared to a mere growth of 3.4% YoY in the corresponding periods a year ago. However, growth in private consumption slowed down to a 5-quarter low of 7% YoY while the government expenditure rose to 2-quarter high growth of 12.7% YoY during Jul-Sep'18.

On the supply side, the output growth, as depicted by the gross value added (GVA), rose to 6.9% led by a slow down in industrial value addition (manufacturing, mining, electricity, and construction) reaching 6.8% YoY in Q3 2018. This indicates a considerable slowdown in private sector demand. There was a modest decline in farming activity as the agricultural sector growth, reached a mere 3.8% YoY during Jul-Sep'18. However, the services sector (trade, financial services, and public administration) continued to report a robust growth reaching 7.5% YoY in Q3 2018.

The moderate slowdown in the second quarter GDP figures can be possibly linked to the spurt in crude oil prices, higher import bill and depreciation in rupee which brought about destability in the economy, but over the past month, they have got back on track. Another possible link for the lower-than-expected growth figures is with regard to the lack of availability and cost of financing for some sectors such as the micro, small and medium enterprises (MSME). Creditworthiness for MSMEs had declined after panic gripped in the non-banking financial companies (NBFCs) due to a set of defaults by a company IL&FS. With RBI making it clear that there isn't any credit crunch in the NBFCs, we can hope to see more credit flowing to these segments.

Further, the government should focus on improving private investment and creating jobs so that there can be a growth pick up at least in the next two quarters. We feel, at present the economy continues to be on a strong footing, as oil prices have started to fall and currency has started appreciating.

Overall, the investment growth seems healthy, but consumption has slowed down. Ahead of the elections due next year, the likelihood of improvement in H2GDP growth will depend upon the pickup in consumption demand along with gradual improvement in investment. A pick up in credit growth can also influence growth. A likely pause with the interest rate hike, by the monetary policy committee (MPC), consumption, the strongest engine of growth should improve.

Brief Overview

Real GDP or Gross Domestic Product of India at constant (2011-12) prices is computed using expenditure approach to output. Under this approach, the output or GDP is the sum of private final consumption expenditure (PFCE), government output or Government Final Consumption Expenditure (GFCE), capital formation as indicated by Gross Fixed Capital Formation (GFCF) and Net Exports (Exports minus Imports).

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The Central Statistical Office under the Ministry of Statistics and Program Implementation (MOSPI) releases the official estimates of  GDP.  The National Accounts Division (NAD) under CSO is responsible for the preparation of national accounts, which includes Gross Domestic Product, Government and Private Final Consumption Expenditure, Gross Fixed Capital Formation and other macroeconomic aggregates.

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Gross Value Added at Basic Prices (Sector-wise)

Note: Gross Value Added at Basic Prices (2011-12=100) shows the value addition at the industry level. All the components have been included. The Agriculture sector represents the Agriculture, Forestry and Fishing category; the Industry Sector comprises of Manufacturing, Mining Quarrying, Electricity, Gas Water & Other Utilities and Construction. Services Sector comprises of all the service categories.

Non-government GVA is GVA excluding public administration, defence, and other services.

Next Release Date: February 28th, 2019

Per-Capita GDP of India

Note: To calculate real per capita GDP of India we have used the yearly population estimates of CSO and the yearly GDP of India from 2011-12 to 2016-17. For data, before 2011-12 we (IMA) have used growth rates for those years, obtained from a series on a different base year. For example, The GDP of 2011-12 (on 2011-12 base year) and its year on year growth rate (from 2004-05 base year series) gives us the GDP of 2010(on the base of 2011-12). The real per capita GDP is then computed from the rebased data. The GDP deflator, which is the ratio of Real GDP to Nominal GDP is calculated from the extended rebased series of real GDP 2011-12 and nominal GDP.

Nominal GDP-Annual

Note: The years in the graph represent the fiscal year, for instance, the year 2009 represents the period Apr'09-Mar'10. with 2011-12 as the base year for the entire series.  

Real GDP- Annual

Note: The years in the graph represent the fiscal year, for instance, the year 2009 represents the period Apr'09-Mar'10. with 2011-12 as the base year for the entire series.  

National Savings

Note: Data prior to 2011 is on 2004-05 base year methodology. The data 2011 and onwards is on 2011-12 base year methodology. 
Note: The years in the graph represent the fiscal year, for instance, the year 2009 represents the period Apr'09-Mar'10.