GDP growth hits 3-yr low of 5.7%

Source: The Hitavada      Date: 01 Sep 2017 09:06:59



Jaitley blames it on destocking of pre-GST stocks, hopes the curve could turn up with GST implementation

INDIA’S GDP grew slower at 5.7 per cent during April-June — the lowest in three years of the Modi Government while lagging China for the second straight quarter — as manufacturing slowed ahead of the GST launch and note ban impact lingered.
As businesses destocked inventories ahead of the GST kick-off from July 1, gross value added (GVA) in manufacturing declined to a low of 1.2 per cent, from 10.7 per cent, year on year.

Gross domestic product (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.
China recorded 6.9 per cent growth in January-March as well as April-June quarters.

Expressing concern on the GDP numbers, Finance Minister Arun Jaitley said manufacturing growth rate seems to have bottomed out as GST has been implemented and destocking of pre-GST stocks is almost complete.
“... With GST now being operationalised, this would be bottoming out as far manufacturing is concerned and probably the curve could turn up,” the minister told reporters here.

The national income data released by the Central Statistics Office (CSO) for the first quarter is lowest during the Narendra Modi-led Government’s regime, which assumed office in May 2014. The previous low of 4.6 per cent was recorded in January- March 2014.

Chief Statistician T C A Anant said 74 per cent of manufacturing GVA comes from the private sector whose performance was poor. Prices have risen on account of growth in input costs and “very large level of inventory de-accumulation that took place in the first quarter this fiscal”, he said while explaining the numbers.

Observing that it will be wrong to link the entire decline in economic activities to demonetisation, Anant said GVA was declining from the second quarter of the last fiscal, much before the November 8 decision of the Government to junk high-value currency notes.
“We are certainly concerned (about low growth),” Jaitley said.