advance estimates of national income 2012-13

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Advance Estimates of National Income: 2012-13

The Central Statistical Office has released the advance estimates of national income for the current

fiscal. As per these estimates Indias economic growth (GDP) in 2012-13 would be 5%, the lowest level

since over a decade.

This estimate is by far been the lowest of all the growth projections made by the RBI and the

government for the current fiscal. It is also sharply lower than the 7.6% GDP estimate made in the

Union Budget for 2012-13.

Table 1 and 2 summarises the advance estimates of the Central Statistical Office

Table1: GDP at factor cost (2004-05)

2011-12 2012-13

GDP (Rs. cr.) 52,43,582 55,03,476

% growth 6.2 5.0

Source: CSO

Sector wise estimates:

Table 2: sectorwise- advanced estimates (% change)

% 2011-12

(RE)

2012-13

(AE)

Agriculture, forestry and fishing 3.6 1.8

Mining and Quarrying -0.6 0.4

Manufacturing 2.7 1.9

Electricity, gas & water Supply 2.7 1.9

Construction 5.6 5.9

Trade, hotels, transport, and

communication

7.0 5.2

Financing, Insurance, real estate &

business services

11.7 8.6

Community, social & personal

services

6.0 6.8

Source: CSO

GDP growth is estimated to decline 1.2% from that in the last fiscal to 5% in 2012-13. Thisdecline for the year as a whole indicates that the economic growth has seen a larger slowdown

in the second half of the fiscal as the first half of 2012-13 recorded a growth of 5.4%.

The growth in agriculture and allied activities is projected to be 1.8%, lower than the 3.6% of theprevious fiscal. This decline in agri-performance can be attributed to the adverse impact of the

unfavourable weather conditions witnessed in the country this fiscal.

Manufacturing growth too is expected to fall from 2.7% to 1.9%.The manufacturing sectoroutput has been lack lustre for most of the current fiscal up till now. For nearly 6 out of the 8months for which data is currently available, manufacturing output has been negative.

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National Income Estimates: 2012-13 2

The services sector too has seen a sharp decline this year, contrary to expectations. This sector,including finance, insurance, real estate & business services is projected to see a sharp decline of

3.1% this financial year to 8.6%. This decline in the services sector is a significant let down for the

countrys economic growth as this segment has been the major contributor to the countrys

economy in recent years, recording near continuous growth rates over 10%. The decline in this

sector can be in large part being attributed to the overall slowdown in the global economy which

has restricted the demand for services.

Community, social and personal services have been estimated to register marginally highergrowth from 6% last fiscal to 6.8% this year. This number may come down as the finance

minister has indicated that there would be expenditure cuts across the board to contain its fiscal

deficit.

Mining and quarrying is expected to register a growth of 0.4%. This growth however is notindicative of improvements in this sector as this sector has experienced negative growth of 0.6%

over the last years.

Consumption Trend:

Table 3: Consumption Trend (as % of GDP)

Industry FY12 FY13

Private Final Consumption Expenditure 56.3 56.9

Government Final Consumption

Expenditure 11.6 11.8

Gross Fixed Capital Formation 30.6 29.9

Change in Stocks 2.1 3.0

Valuables 2.7 2.4

Source: CSO

Private Final Consumption Expenditure is estimated at 56.9% of GDP in FY13 higher than 56.3% in FY12

while Government Expenditure to GDP increased marginally to 11.8% from 11.6% in FY12. Gross fixed

capital formation has been estimated lower at 29.9% as against 30.6% in the previous year, indicating

lower investment activities. Change is stock is expected to increase to 3% of GDP from 2.1% in FY12,

indicating higher inventory levels, indicative of lower demand. Also, the valuables are observed to

experience a decline from 2.7% to 2.4%. This is largely reflective of the probable decline in valuable such

as gold.

Our view

Structural bottlenecks, policy inaction, high interest rates, declining exports, lacklustre agricultural growth,

low non-food credit growth, declining industrial growth has led to the systematic decline in the overall

economic growth of the country in the current year. Despite the government initiating a series of reforms

since September12, the various economic indicators that have been released since are indicative of the

continuing deterioration in the economy.

To revive growth and promote investments in the coming fiscal, the government would be pressured topresent in its upcoming budget measures that would help overall growth.


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National Income Estimates: 2012-13 3

We expect growth to revive gradually going into the next fiscal and our preliminary estimate for GDP growth is

6% for 2013-14. This growth would however be contingent on various factors such fiscal stimulus from the

government along with the necessary policy reforms, lower interest rates, improvement in global economic

conditions and revival in industry among others.

Contact:

Kavita Chacko

Economist

[email protected]

91-022-67543646

Jyoti Wadhwani Anuja Jaripatke Shah

Associate Economist Associate Economist

[email protected] [email protected] 91-022-67543552

Disclaimer

This report is preparedby the Economics Division of CreditAnalysis & Research Limited [CARE]. CARE has taken utmost care to ensure

accuracy and objectivity while developing this report based on information available in public domain. However, neither the accuracy

nor completeness of information contained in this report is guaranteed. CARE is not responsible for any errors or omissions in

analysis/inferences/views or for results obtained from the use of information contained in this report and especially states that CARE

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advance estimates of national income 2012-13

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