The CSO’s GDP data for the first quarter 2017-18 shows GDP growth rate scooping to three year’s low of 5.7%. In an unusual quarterly trend, the manufacturing sector growth crashed to 1.2%, that is just one-tenth of the growth registered in the same quarter last year.
New data indicate a worrying trend as the previous quarter of Q4, 2016-17 registered just 6.1% growth under a suffocating demonetization impact. Some economists doubt the triggering of a slowdown along with the short-term factors like demonetization and GST launch impacts for two successive below par performances.
Chief statistician TCA Anant pointed out sharp fall in industry output as the factor behind the downfall. According to him, industrial sector resorted to de-stocking of inventories before the GST launch which caused the slow-down in production. The manufacturing sector GVA was just 1.2% during April June 2017 compared to 10.7% in the same quarter last year.
Two successive anti-trend performances in the economy can be attributed to short-term aberrations like demonetization and the GST distractions. At the same time, the RBI Annual Report and few economists warn the emergence of structural slow down which is more worrisome. If those slow down factors are in operation, it demands high level corrective measures without delay.