New Delhi: India’s GDP or gross domestic product grew at a lower-than-expected 5.7 per cent in the April-June quarter, slowing down from 6.1 per cent in the March quarter. Economists polled by Reuters had forecast Indian economy to grow at 6.6 per cent in the first quarter. Destocking, in the run-up to July 1 GST implementation, impacted the growth numbers, say analysts. India’s economy had expanded at 7.9 per cent in the April-June quarter of the previous year.
Indranil Pan, group economist at IDFC Bank, said: “Going ahead growth will be driven by GST (goods and services tax) and the pace of cleaning banks’ balance sheets to improve the credit culture in the economy.”
Prime Minister Narendra Modi’s shock decision last November to scrap high-value old banknotes wiped out about 86 percent of currency in circulation virtually overnight, pounding consumer demand. This resulted in the GDP growth slowing down to 6.1 per cent in the March quarter.
But economists expect the economic growth to improve during the course of this year. Economic activity in the country, which had lost some momentum in the run-up to the July 1 Goods and Services Tax (GST) rollout, has started to recover, according to global brokerage Nomura.
The brokerage expects GDP growth to accelerate in the second half of the current year. The GST tax collection is off to a good start, with collections exceeding the revenue target for the first month of July. Nearly one-third of tax payers are yet to submit their returns. Analysts say that collections are likely to go up as more tax payers pay their dues.
The RBI estimates economic activity as measured by gross value added (GVA) to expand by 7.3 per cent in the current fiscal, up from 6.6 per cent in 2016-17, the Reserve Bank said in its annual report unveiled on Wednesday. Real gross value added (GVA) is another measure of economic activity that is arrived at by excluding net indirect taxes from GDP.