India has lost its fastest growing economy tag, as Gross Domestic Product (GDP) slipped to 6.1% in Q4, 2016-17. Data released by government reveals that India’s GDP has come down to 6.1% in January-March 2017. India’s loss was China’s gain in Q4, as it became the fastest growing economy in the world with a GDP of 6.9% in Q4. However, India’s annual GDP is still strong at 7.1 percent, in line with the predictions made by leading economists. The government had earlier revised the targeted GDP at 8 percent, but actual is only 7.1%. This is slightly better than last financial year, when the annual GDP was 7 percent.
Financial analysts said that the drop in GDP in Q4 is largely due to demonetization of Rs 500 and Rs 1000 currency notes. However, it may not be such a bad news, especially in the long run, as global ratings agency Moody’s Investors Service has predicted that India’s GDP would accelerate in the next 3-4 years based on positive reforms such as GST, and will hover around the 8 percent mark. Leading economists say that GST would contribute 2 percent to India’s GDP and its impact could be assessed by financial year 2018.