In News:

• The government revised downwards its estimate for GDP growth in the 2018-19 financial year to 7% from the 7.2% estimated in the first estimate for the year released in January.

Explained:

• The slowdown in 2018-19 is due to a lowering in the growth estimate of the agriculture sector to 2.7% as per the latest data compared with the 3.8% estimated earlier. The manufacturing sector, too, is estimated to grow at a marginally lower 8.1% compared with the previously predicted 8.3%. Data showed that the GDP growth slowed for the third consecutive quarter in the quarter ended December 2018 to 6.6% — a six-quarter low — from 7% in the second quarter and 8% in the first quarter of this financial year.
• The primary reason for this is the upwards revision in FY18 GDP growth rate in the first revised estimate [released on January 31, 2019] to 7.2% from 6.7% earlier.
• The two notable divergences between the second estimate and the first are that private final consumption expenditure growth has been revised upwards to 8.3% from 6.4% and investment growth was revised lower to 10% from the earlier estimate of 12.2%.
• FY19 GDP growth in second advance estimate of national income is lowered to 7% from 7.2% in first advance estimate.
• Economists point out that the size of the economy in terms of nominal GDP is now estimated to be Rs. 190.54 lakh crore, up from the Rs. 188.41 lakh crore estimated earlier.
• This will go a long way in helping the government meet its fiscal deficit target of 3.4% of GDP for the year.
• In a quarterly basis, the agriculture sector is estimated to have grown at 2.7% in the third quarter of this financial year, compared with a 4.6% growth in the same quarter of the previous year.