India’s GDP growth slumped to a three-year low of 5.7 per cent during April-June – lagging China for the second straight quarter – as manufacturing slowed ahead of the GST launch amid demonetisation effect
Union Finance Minister Arun Jaitley on Thursday expressed concern over India’s GDP figures after the country’s economic growth slipped to a three-year low of 5.7 per cent in April-June quarter. In a statement to the media, Jaitley said: “Certainly a matter of concern that first quarter GDP has come down to 5.7 per cent and its obvious therefore throws up challenge for the economy.” As a measure to improve the figures, Jaitley added that in the coming quarters the government will work on both policy and investment.
India’s GDP growth slumped to a three-year low of 5.7 per cent during April-June – lagging China for the second straight quarter – as manufacturing slowed ahead of the GST launch amid demonetisation effect. China clocked 6.9 per cent growth in January-March as well as April-June quarters. The expansion in gross domestic product (GDP) was 6.1 per cent in the preceding quarter and 7.9 per cent in the same period last fiscal. The previous low of 4.6 per cent was recorded in January-March 2014.
Gross value added (GVA) in the manufacturing sector fell sharply to 1.2 per cent, from 10.7 per cent year on year, as the businesses focussed more on clearing inventories rather than production ahead of the July 1 launch of GST. A separate set of official data showed that growth of eight core sectors slowed to 2.4 per cent in July due to contraction in output of crude oil, refinery products, fertiliser and cement.
Uncertainty about new indirect tax rates under GST prompted a host of industries, including carmakers, FMCG companies and garment manufacturers, to clear their stocks. Demonetisation of high-value currency notes in November last year impacted economic activities in the January-March quarter as GDP growth slipped to 6.1 per cent and further to 5.7 per cent in the three months to June.
Increasing the GDP will ultimately put more money into the pocket of everyday Indians and stop middle class crunch. When the GDP increases so do the size of people’s wallets.