Published: Sat, September 02, 2017
Worldwide | By Sean Reid

India's Economic Growth Unexpectedly Hits Three-Year Low In June Quarter

India's Economic Growth Unexpectedly Hits Three-Year Low In June Quarter

While the economy grew by 5.7 per cent in April-June quarter, the growth rate was 6.1 per cent in January-March quarter, the last of 2016-17, the government said today.

Economic growth dropped to a three-year low of 5.7 per cent during April-June as manufacturing slowed.

The country's economy has lost further steam in the April-June quarter, with growth sliding to its lowest level in more than three years.

The GDP growth in the first quarter of 2017-18 was lower than 6.1 per cent of the preceding one and 7.9 per cent in the same period last fiscal.

On Thursday, The Central Statistics Office (CSO) released the Gross Domestic Product (GDP) figures which trigger an alarming situation for the government of India.

Economic growth in the second quarter (July-September) of 2017-18 is expected to soar to 7- 7.5 per cent on the back of good monsoon and clarity over GST, Niti Aayog's new Vice-Chairman Rajiv Kumar said today.

There was a marginal decline in the growth of agriculture, forestry and fishing at 2.3% against 2.5% growth last year, whereas growth in electricity, gas, water supply and other utility services came down to 7% against 10.3% growth last year.

Growth in the financial, insurance, real estate and professional services sectors also slowed from 9.4% to 6.4%. "Its performance has been poor, though the sales growth is good", he said. Agriculture, growing at 2.3% could match up to 2.5% seen in the corresponding quarter previous year.

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In 2012-13 India had slipped into a low sub-5 percent growth due to a series of corruption scandals at home and uncertain external economic environment.

A day after the government reported lower-than-anticipated gross domestic product (GDP) figures, the market seems to have taken it in its stride and was trading in the green.

Meanwhile, Basu said 2.3 percentage points of growth has been lost due to demonetisation.

"Principally, the major sector that has seen a sharp decline in industry", he said.

Capital investment also rebounded from a 2.1 percent contraction in the March quarter.

Jaitley said that if that was the trend, this would be the bottoming out as far as manufacturing was concerned, and that it would only improve from here.

In the backdrop of the RBI's report stating that 99 per cent of the demonetised cash had come back into the banking system, Finance Minister Arun Jaitley on Thursday said "all of it may not be accounted money". "However, de-stocking has now been completed, and therefore we can expect production to go up", he said.

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