Taking into account various factors during the fiscal, the RBI said, “The projection of real GVA growth for 2017-18 has been revised down to 6.7 percent from the August 2017 projection of 7.3 percent, with risks evenly balanced.”
The Reserve Bank of India (RBI) lowered the country’s growth projection for 2017-18, pegging the Gross Value Added (GVA) at 6.7 percent. The central bank had earlier estimated India’s GVA to grow in 2017-18 at 7.3 percent.
GVA is considered a more accurate index of growth as it excludes the component of taxes and subsidies that go into calculation of the Gross Domestic Product (GDP).
While announcing its fourth bi-monthly monetary policy review of the fiscal, the RBI also kept its key interest rate unchanged at 6 percent citing upside risks to inflation.
Another factor weighing on the RBI in lowering the growth outlook was the new Goods and Services Tax (GST)
“The implementation of the GST so far also appears to have had an adverse impact, rendering prospects for the manufacturing sector uncertain in the short term. This may further delay the revival of investment activity, which is already hampered by stressed balance sheets of banks and corporates,” the RBI monetary policy statement said.
“Consumer confidence and overall business assessment of the manufacturing and services sectors surveyed by the Reserve Bank weakened in Q2 of 2017-18,” it added.