GDP growth in FY15 remains between 5.2%-5.5%: CARE

India Infoline News Service | Mumbai |

Government’s restraint on expenditure in a bid to rein in the fiscal deficit has translated into lower growth in ‘community, social and personal services’ in FY14 at 5.6%

GDP Growth in FY14 as per the provisional estimate was recorded in line with CARE’s estimate at 4.7%, while the growth in Q4FY14 stood at 4.6% compared with 4.4% in Q4 FY13. There were revisions in the Q1 and Q2 numbers to 4.7% and 5.2% respectively, thus breaking the chain of sub-5% growth for 5 quarters. The annual growth in FY14 has improved compared with 4.5% growth in FY13 however; it came in below the earlier official expectation of 4.9%.
Highlights:
The growth in GDP in FY14 was primarily on account of a significant improvement in ‘agriculture, forestry & fishing’, ‘electricity, gas and water supply’ and ‘finance, insurance, real estate and business services’
Strong performers
? ‘Agriculture, forestry and fishing’ witnessed a turnaround in Q4 FY14 as it clocked a growth of 6.3% as opposed to 1.6% in Q4 FY13. A good rabi harvest has contributed to this growth. The sector also recorded its highest growth in Q4 relative to other quarters in FY14. Lastly, upward revisions in the production of rice, wheat and sugarcane assisted the overall growth in FY14 to be estimated at 4.7%, sharply higher as compared with 1.4% growth in FY13.
The ‘electricity, gas and water supply’ sector has recorded a healthy growth of 5.9% in FY14 as opposed to 2.3% in the previous fiscal driven primarily by the strong performance of the electricity
companies.
? In FY14, ‘financing, insurance, real estate and business services’ has been a strong sector as it recorded an improvement in each quarter relative to the growth in the corresponding quarter of the fiscal. This has translated into an overall growth of 12.9% in FY14 over the 10.9% growth in FY13.
Weak performers
Overall the weak performance of the services sector has offset the growth registered by the primary sector particularly.
? ‘Trade, hotels, transport and communication’ has recorded a slowdown in FY14 at 3.0% vis-à-vis the growth of 5.15 in FY13. Subdued activity in industry contributed to this low growth. However, in Q4 in particular, the sector registered significant growth at 3.9% owing to the good rabi harvest which in turn led to higher demand for transportation and trade.
? ‘Construction’ continued to register another year of low growth at 1.6% owing to the low levels of infrastructure activity and industrial growth in FY14.
? Government’s restraint on expenditure in a bid to rein in the fiscal deficit has translated into lower growth in ‘community, social and personal services’ in FY14 at 5.6%. This got reflected more in the Q4 growth of 3.3% as the government reduced its expenditure to meet the fiscal deficit target for the year.
? ‘Manufacturing’ has arguably been the hardest hit sector in FY14 with a growth rate of -0.7% as opposed to the growth of 1.1% in FY13.
Weak performers
Overall the weak performance of the services sector has offset the growth registered by the primary sector particularly.
? ‘Trade, hotels, transport and communication’ has recorded a slowdown in FY14 at 3.0% vis-à-vis the growth of 5.15 in FY13. Subdued activity in industry contributed to this low growth. However, in Q4 in particular, the sector registered significant growth at 3.9% owing to the good rabi harvest which in turn led to higher demand for transportation and trade.
? ‘Construction’ continued to register another year of low growth at 1.6% owing to the low levels of infrastructure activity and industrial growth in FY14.
? Government’s restraint on expenditure in a bid to rein in the fiscal deficit has translated into lower growth in ‘community, social and personal services’ in FY14 at 5.6%. This got reflected more in the Q4 growth of 3.3% as the government reduced its expenditure to meet the fiscal deficit target for the year.
? ‘Manufacturing’ has arguably been the hardest hit sector in FY14 with a growth rate of -0.7% as opposed to the growth of 1.1% in FY13.
? Further conjectures regarding the economy’s performance will follow upon the announcement of the Union Budget for FY15.
 

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