The GDP growth data for September quarter will be announced on 30th November (Thursday) FY of 2017. It is anticipated that GDP figures of September quarter will increase as compared to June quarter, GDP rate was 5.7% in the June quarter but the data may be murky by the introduction of Goods and Services Tax (GST).
After the implementation of new indirect tax system from 1st July across India, it’s difficult for the government statisticians to determine the growth of hotel segments and trade industry. The hotels, transport and trade segments and also communication and services associating to a broadcast group, bestow nearly 20 percent of GDP.
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Here, trade comprises both, wholesale and retail trade in all raw material whether manufactured domestically, either imported or exported. Sales Tax Growth is the essential indicator used for determining the gross value added (GVA) in the trade sector. After the implementation of GST, as such, there are no separate figures provided to the Central Statistics Office (CSO) to calculate GDP growth.
The former chief statistician of India Pronab Sen, said, “Since 85% of trade activity happens in the unorganized sector, sales tax growth is used as a proxy. However, CSO now cannot use GST data for the same. There is also no base available for the GST data to get a growth rate for trade activity.”
Sen further added that CSO may use the old system (value of trade in goods) to determine the GDP growth data in trade activity by including agriculture, manufacturing and imported goods as a proxy before the FY of 2011-12.
“This used to give a reasonable estimate for trade activity under the old series and can be easily calculated even under the new series”, said Sen.
According to a report released by HSBC Global Research, the GDP growth of second quarter showing that how effectively the economic growth of India is retrieving from the hurdles that come in the new indirect tax regime.
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Sen said, “Unable to match its stellar performance in FY17, agricultural growth may moderate to its long-term average, due to low production of key crops and a drag from animal husbandry. Industrial growth could normalize to the north of 4% as manufacturing picks up the pace, but only gradually, given 40% of the sector is still contracting and the other 60%, though growing, is performing much worse than before.”
Due to the implementation of the new indirect tax system, it is anticipated that the services growth could lower in public administration, trade and transport segments.
