India’s Q1 GDP hit 3 year low of 5.7%

01 Sep 2017 Evaluate

Dragged down by sluggish manufacturing, India's Gross Domestic Product (GDP) growth slowed down to a three-year low of 5.7% during the first quarter (April-June) of the fiscal year 2017-18, as against 7.9% in the corresponding period a year ago and 6.1% in the preceding quarter. This is the slowest pace of economic growth since the January-March quarter in 2014. The slowdown was induced by demonetisation coupled with the uncertainty ahead of rollout of the goods and services tax (GST).

As per the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation data, GDP at constant (2011-12) prices in Q1 of 2017-18 is estimated at Rs 31.10 lakh crore, as against Rs 29.42 lakh crore in Q1 of 2016-17, showing a growth rate of 5.7%. Quarterly GVA at basic price at constant (2011-2012) prices for Q1 of 2017-18 is estimated at Rs 29.04 lakh crore, as against Rs 27.51 lakh crore in Q1 of 2016-17, showing a growth rate of 5.6% over the corresponding quarter of previous year.

GDP at current prices in Q1 of 2017-18 was estimated at Rs 38.84 lakh crore, as against Rs 35.55 lakh crore in Q1 of 2016-17, showing a growth rate of 9.3%. GVA at Basic Price at current prices in Q1 of 2017-18, is estimated at Rs 35.77 lakh crore, as against Rs 33.17 lakh crore in Q1, 2016-17, showing an increase of 7.9%. The economic activities which registered growth of over 7% in Q1 of 2017-18 over Q1 of 2016-17 are ‘trade, hotels, transport & communication and services related to broadcasting’, ‘public administration, defence and other services’ and ‘electricity, gas, water supply & other utility services’.

According to the data, manufacturing sector crawled at 1.2% during the quarter-ended June from a 10.7% growth in the same period last year. Quarterly GVA at basic prices for Q1 2017-18 from ‘agriculture, forestry and fishing’ sector grew by 2.3% as compared to growth of 2.5% in Q1 2016-17, ‘mining and quarrying’ sector grew by (-) 0.7% as compared to growth of (-) 0.9% in Q1 2016-17, ‘Electricity, Gas, water supply and other utility services’ sector grew by 7.0% as compared to growth of 10.3% in Q1 2016-17 and ‘Construction’ sector grew by 2.0% as compared to growth of 3.1% in Q1 2016-17.

Terming the first quarter GDP data as a matter of concern, the finance minister Arun Jaitley has said that the government requires both in policy and investment to work more to improve this figure. Stating that slowing of the economy was predominantly due to the pre-GST de-stocking and consequent decline in production, finance minister said ‘Hopefully, with the operationalisation of GST, the slowdown in manufacturing would be bottoming out.’ He further said that improvement in the global economy and good monsoon will aid GDP growth in the coming quarters which ought to be better if the country is to achieve the annual growth target.

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