Q1 GDP growth slumps to 3-year low of 5.7%; Arun Jaitley blames destocking by manufacturers before GST

The Central Statistics Office (CSO) on Thursday said Gross Domestic Product (GDP) slumped to a three-year low of 5.7 per cent for the First Quarter (April-June) of financial year 2017-18.

The Q1 GDP is estimated at Rs 31.10 lakh crore, as against Rs 29.42 lakh crore in Q1 of 2016-17, showing a growth rate of 5.7 percent, Ministry of Statistics & Programme Implementation said in a release. 

GST, the biggest indirect tax reform since Independence led to destocking activities undertaken by the manufacturers ahead of Goods and Services Tax implementation.

Finance Minister Arun Jaitley blamed destocking by manufacturers during pre-GST period for lower GDP growth numbers, saying it was the most predominant reason for decline in growth.

After Prime Minister Narendra Modi's demonetisation move, GDP growth had declined to 6.1 per cent in January March quarter of the previous financial year. Experts had predicted that effects of deometisation would diminish in the current fiscal. However, the new GDP numbers of April-June quarter tell a different tale.

Chief Statistician TCA Anant said decline in inventory before GST implementation pulled down GVA. "Large connection of growth slowdown is due to WPI normalisation," he said.

Quarterly GVA at basic price at constant (2011-2012) prices for Q1 of 2017-18 is estimated at Rs 29.04 lakh crore, as against Rs 27.51 lakh crore in Q1 of 2016-17, showing a growth rate of 5.6 percent over the corresponding quarter of previous year, the release said.

The  Central Statistics Office (CSO), Ministry of  Statistics and  Programme Implementation has released the estimates of Gross Domestic Product (GDP) for the first quarter (April-June) Q1, of 2017-18, both at constant (2011-12) and current prices, along with the corresponding quarterly estimates of expenditure components of the GDP.

The economic activities which registered growth of over 7 percent in Q1 of 2017-18 over Q1 of 2016-17 are 'trade, hotels, transport & communication and services related to broadcasting', 'public administration, defence and other services' and 'electricity, gas, water supply & other utility services'.

The growth in the 'agriculture, forestry and fishing', 'mining and quarrying', 'manufacturing',  'construction'  and  financial, insurance, real estate and professional services  is estimated to be 2.3 per cent, (-) 0.7 percent, 1.2 per cent, 2.0 percent and 6.4 percent  respectively during this period.