A major decline in manufacturing and the lingering effects of demonetisation sharply pulled down India’s economic growth rate in the first quarter of the current fiscal ended June to 5.7 per cent, as compared to 7.9 per cent in the same period a year ago, official data showed on Thursday.
According to data from the Central Statistics Office (CSO), India’s gross domestic product (GDP) for the first quarter at Rs 31.10 lakh crore also registered a sequential fall compared with the 6.1 per cent growth in the fourth quarter of the 2016-17.
“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 per cent,” a CSO release said.
In terms of Gross Value Added (GVA), which excludes indirect taxes and subsidies, the growth was even lower at 5.6 per cent over the GVA for the corresponding quarter of last year.
The principal reason for the decline in growth is a fall in manufacturing sector, which saw a growth of 1.2 per cent during the quarter, Chief Statistician T C A Anant told reporters here after the release of the GDP numbers.
“Principally, the major sector that has seen a sharp decline in industry,” he added.
“The major reason for slowdown in growth at 5.7 per cent is on account of manufacturing, where Gross Value Added (GVA) is largely contributed by the private sector. In all, 74 per cent of the GVA comes from corporate sector. Its performance has been poor, though the sales growth is good,” he added.
Anant said the slowdown in the first quarter to 5.7 per cent was due to de-stocking by firms as caution ahead of the GST roll-out on July 1.
He said there was a likely revival from the second quarter onwards as subsequently stocks would be restored to normal levels as the GST regime progressed.
The GVA in manufacturing was showing a declining trend from Q2 of the last fiscal, which has continued, he added.
Anant noted that another reason for the fall in growth rate was rise in costs on account of prices in intermediate inputs, which has been much higher than last year.
He said services and crop production have seen an increase in the first quarter.