In the June quarter of 2016, growth was 7.9 percent. That's a big drop from the quarter before and much slower than the 7.1% growth it recorded in the same period a year ago. The previous low of 4.6 per cent was recorded in January-March 2014.
Anant pointed out that the gross value added (GVA) in April-June quarter (5.6 per cent) was much less than in the same period past year (7.6 per cent).
India, which had the mantle of world's fastest growing major economy, has now slipped below China in terms of growth. The government has been boasting around about the tag, which doesn't mean nothing much other than that the country is a bright spot in the gloomy global economic scenario. It was last in 2013-14 that the GDP had grown by 6.4 per cent. Experts aver it would a few more quarters for India to win back the tag.
The GDP data belied those hopes.
"We, however, see GDP growth picking up in the third quarter".
India aims to trim the fiscal deficit to 3.2 percent of gross domestic product in 2017-18 compared with 3.5 percent in the previous year. But the next quarter impact will be of GST (goods and services tax), which will have an adverse impact on growth overall. The construction sector grew by 2 per cent after a negative March quarter; the hotel, transport and communication segment grew 11.1 per cent on higher sales perhaps because of discounts in the run-up to the roll-out of GST.
"Principally, the major sector that has seen a sharp decline in industry", he said.
RBI data proves Prime Minister Modi's demonetisation failed on all fronts
Earlier, former finance minister P Chidambaram had slammed the government terming note ban move as "disaster" and "anti-national". He also said that the manufacturing industry is continuously contracting and that "Make in India" continues to remain a slogan.
India Inc expressed disappointment over slowing down of India's GDP growth to 5.7%, as the industry was anticipating a rebound from low growth numbers. "Initially it was [the cash ban], now the GST impact has just hit and it's likely to persist for couple of quarters at least". "Corporate entities were pulling down their stocks in April-June, which seems to be in anticipation of GST", Anant said. "Since it came in July, most manufacturers were de-stocking", Jaitley told reporters here, noting that services growth had, however, improved during the quarter in question.
Service exports - a strength of the Indian economy thanks to the success of outsourcing firms such as Infosys Ltd and Tata Consultancy Services - are more vulnerable to the rupee's rise.
India's first quarter economic growth for the fiscal year 2018 considerably undershot market expectations.
The Finance Minister also said that manufacturing has 'bottomed out, ' services have improved and gross fixed capital formulation has turned positive. "But, if this is the rate of GDP going forward, then achieving eight percent GDP looks hard", he added. "In net, our full-year GVA estimate of 6.8 percent needs to be revisited". It has to be noted that for the last 8 quarters, the GFCF has remained in a tight range of 28.5-31.2 percent of GDP.
"With due respect to my mentor Manmohan Singh, this quarterly data can not be used to say look GDP will drop by 1 -2.5 per cent". Unless there is a pick up in these figures, one can not expect an improvement in the jobs scenario.
The government says it wanted to crack down on tax evaders by rendering piles of hidden cash suddenly useless, and also to flush out fake currency from the economy.