New Delhi (Sputnik) — India's economy slowed down to a three-year low during April-June this year. Government statistics released on Thursday show a stunted growth rate of only 5.7 percent during the last three years due to a severe slowdown in the manufacturing & industrial sectors.
This has given the opposition another chance to mount criticisms on Prime Minister Modi, who is already under attack after the country's central bank declared that 86 percent of money supply in form of high-value banknotes was flushed out of the economy during last year's demonetization drive, without any significant impact on curbing black-money or tax-evasion.
The 5.7 percent growth rate recorded for the quarter ending June is the lowest since the last quarter of 2014. This was the fourth consecutive quarter during which the country's GDP recorded dismal growth. By contrast, last year in the April-June period India recorded a 7.9 percent growth in GDP. Manufacturing fared badly with output increasing just 1.2 percent, while output in construction grew just 2 percent.
Economists view this in the light of two consecutive decisions of the government — demonetization and goods & services tax (value added tax system).
"Growth numbers indicate a moderation in agriculture and industrial sectors. The uncertainty surrounding the implementation of Goods and Services Tax did impact industrial production in the first quarter; however, we are confident that this effect will wane off in coming months. Also, the overall growth conditions remain conducive and a pickup in economic activity can be expected in the second half of this fiscal year," Pankaj Patel, President, Federation of Indian Chambers of Commerce and Industry, said.
Nevertheless, the country's chief statistician, T.C.A. Anant, blames rising prices and poor corporate performance for fall of the GDP rather demonetization. Anant expects a stabilization of prices in the next few months.