CSO Pegs GDP Growth at 5%

Central Statistics Office (CSO), in its provisional estimates, has pegged India’s GDP growth to be at 5%. This is a lower estimate compared to RBI’s GDP growth estimates of 5.5% (WHEN). Earlier, the International Monetary Fund (IMF) pegged India’s growth for CY12 at 4.9%. HSBC and Morgan Stanley also cut the growth forecast to 5.2% and 5.4% respectively for FY13, while S&P has given a 5.5% estimate for the current fiscal. The CSO's estimates however are lowest, indicating that the country’s growth has taken a big hit due to the continued worldwide slowdown, higher inflation, sustained higher interest rates and declined investments.

CSO has said that Agriculture is expected to grow at 1.8% in FY13 as against 3.6% a year earlier. Manufacturing is expected to report a growth of 1.9% against 2.7% in FY12. The Service sector (hotel, transport, trade and communication) is also expected to grow at 5.2% as against 7% in FY12.

The growth of over 5% would be registered in a few sectors like Financing, Real estate, etc. On the flip side, CSO has said that the lower growth is expected in Mining, Agriculture, Forestry and Fishing, Electricity, Gas and Water supply etc.

In the Agriculture sector, it has said that the production of food grain, cotton, sugarcane, is expected to decline, which may hit the sugar and textile industry. In the Construction sector, it has said that the cement production and steel consumption have registered growth rates of 6.1% and 3.9% in the period from April to December 2012.

CSO in its report said that the growth of the Service industry may slide to 5.2%. This is mainly due to lower passenger and cargo activity in civil aviation and a decline of 3.1% in cargo, handled at major sea ports. Financing, Insurance, Real estate and Business services is expected to register a growth of 8.6% due to the rise in deposits and credits. One would see some negative impact on the logistics sector while a positive impact would be seen in BFSI and Real estate segments.

The GDP growth for FY13 at 5% against 6.2% in FY12 is nearly lowest in the last ten years. The Indian economy has always grown at a rate over 5% since 2004. The lower economic growth has already seen a decline in rupee which has remained weak against the USD over the last one year.

After the data was published by CSO, both BSE and NSE have seen a selling pressure and the benchmark indices on both the exchanges have lost over 0.3%.