India Loses its Fast Growing Economy Tag to China
As per the data released by the Ministry of Statistics, India registered 7.1% growth in the financial year 2016-17, which is slower than the 8% registered in 2015-16. In the fourth quarter of 2016-17, India registered a growth of GDP growth of 6.1% compared with China’s 6.9% in the same period. Hence, it has lost its fastest-growing major economy tag in the fourth quarter of 2016-17.
A decline is also visible in the Gross value added (GVA) growth. It was 6.6% for 2016-17 and 5.6% in the Q4 of 2016-17, compared with 7.9% in 2015-16 and 8.7% in Q4 of that year. The GDP growth rate has registered a slightly higher growth because of proportionate increase in indirect tax net of subsidies.
While GDP gives a picture of whole economy, GVA gives pictures at enterprises, government and households levels. In other words, GDP is GVA of all enterprises, government and households. Further, Gross Value Added (GVA) broadly reflects the supply or production side of the economy.
The GDP numbers have been computed based on the new 2011-12 base year recently adopted for data including the Index of Industrial Production (IIP) and Wholesale Price Index (WPI).
The demonetisation drive of the government had an adverse impact on the economy. The GDP growth got reduced in Q3 and Q4 when compared with the growth rates in the beginning of the year.
GVA growth also registered a slow down in almost every sector in Q4 of 2016-17 when compared with the growth registered in the corresponding period of the previous year.
Capital formation was also relatively soft with growth below 30%.