India’s Gross Domestic Product (GDP) growth has reduced to 5.7 percent for the quarter ending June 2017. This is a significant change since in the year-ago period, the GDP was at a high of 7.9 percent. Even in the first quarter of 2017, the GDP was 6.1 percent. The reduction in GDP has surprised everyone since expectations were much higher than 5.7. Economic experts had predicted that the Indian economy would register 6.6 growth in its GDP in June quarter. However, the actual is just 5.7 percent, which is very depressing. Economists said that destocking of goods in wake of the launch of GST on July 1 may have contributed to loss in GDP growth. Some effects of demonetization may also be responsible for the slow GDP growth rate.
Chief statistician TCA Anant pointed out that the biggest impact on GDP for June quarter came from the slump in manufacturing sector. Anant said that the sector had recorded growth of 10.7 percent in the year-ago period, but during the quarter ending June 2017, the growth reduced steeply to just 1.2 percent. This steep fall in growth of manufacturing sector is largely responsible for the slow GDP growth in June quarter 2017. A slump was also evident in the financial, insurance, real estate and professional services sectors. However, experts are hopeful that GST would act as a catalyst and revive GDP growth in the next quarters.