NEW DELHI: India’s GDP or gross domestic product grew 5.7 per cent on a year-on-year basis during the April-June period (Q1), government data showed on Thursday. During the previous quarter (January- March) the GDP had grown by 6.1 per cent.
The GDP growth rate for the same quarter last year was 7.9 per cent.
A Reuters poll of 30 economists had predicted a 6.6 per cent growth for India’s GDP in the first quarter.
The GDP growth rate has been slowing every quarter since March 2016, when it stood at a whopping 9.1 per cent.
The slowdown was led by the manufacturing sector, which expanded at 1.2 percent from a year earlier compared with a 10.7 percent growth last year.
The financial, insurance, real estate and professional services sectors also slowed to 6.4 percent in the June quarter from 9.4 percent a year ago.
Analysts have owed the slowing rate of growth to disruptions in the economycaused by demonetisation and teething problems after the roll out of GST (Goods and Services Tax)
“The lingering impact of demonetisation is visible in the low growth of construction. The GDP and GVA (growth value added) estimates have undershot our and market expectations by a considerable degree. The combination of lower volumes and higher discounts pre-GST (goods and services tax) and positive WPI (wholesale price inflation) weighed upon the manufacturing sector in Q1,” said Aditi Nayar, economist, ICRA.
Economists in the Reuters poll said uncertainty over how smoothly Goods and Services Tax (GST) will be implemented remains large and tough to forecast. It was launched on July 1 to harmonise various value-added tax regimes across states in India to one national standard.
“The numbers seem to suggest that the slowdown from last the quarter has intensified due to the combination of long-term slowdown and temporary shock factors like demonetisation and GST,” said Abheek Barua, chief economist, HDFC.
The present rate of growth means that India is still one of the fastest growing economies in the world, although it still lags behind China which last reported a 6.9 per cent growth rate.