GDP growth slows to 7.1%, but hope floats on rains, pay boost - Hindustan Times
close_game
close_game

GDP growth slows to 7.1%, but hope floats on rains, pay boost

Hindustan Times | ByGaurav Choudhury, New Delhi
Sep 01, 2016 01:29 AM IST

India’s economic growth rate slowed sharply in the first quarter of the 2016-17 financial year, missing expectations, statistics ministry data released Wednesday showed.

India’s economy grew 7.1% during April to June, the slowest in 15 months, but a pick up is likely in the next few months riding on good rains, a pay bonanza for government employees and festive-season buying.

India’s gross domestic product expanded 7.1% year-on-year in the three months from April-June.(Representative image)
India’s gross domestic product expanded 7.1% year-on-year in the three months from April-June.(Representative image)

The slowdown could also be partly because of a high base effect — a statistical phenomenon that magnifies small changes, although the real fall may not be very large.

Hindustan Times - your fastest source for breaking news! Read now.

Growth of real or inflation-adjusted gross domestic product (GDP) — the value of all goods and services produced in the country — moderated from 7.9% in January to March and from 7.5% in April-June 2015, national income data released on Wednesday showed.

Despite the slowdown, India remains the world’s fastest-growing major economy, ahead of 6.7% growth in China that is battling an industrial deceleration.

The manufacturing sector grew 9.1% during the quarter from 7.3% in the same quarter of the previous year and 9.3% in January to March.

Growth in the construction sector slowed to 1.5% in April-June from 5.6% in the same period of 2015 and 4.5% in January to March 2016.

Abheek Barua, chief economist, HDFC Bank, said: “While an unfavourable base effect is at play, there is a likely slowdown in services sector activity, which alone explains more than half of the moderation in overall growth.”

The latest data came on a day the government eased dispute settlement rules, which will make more funds available and speed up stalled construction and realty projects.

Farm income grew 1.8% during April-June this year, from 2.6% in the same quarter of 2015 and 2.3% in January-March 2016.

The government will be hoping that the recently announced hike in salaries and pensions of 4.8 million central government employees and 5.5 million pensioners will set off a cycle of spending and investment, with people expected to use higher incomes to buy cars and houses.

“Given the good monsoon and the 7th Pay Commission payout effect, we expect the growth to be higher than last year (7.6%), perhaps close to 8%,” economic affairs secretary Shaktikanta Das said.

Read | Difficult to get double-digit growth in current scenario: Jaitley

Unlock a world of Benefits with HT! From insightful newsletters to real-time news alerts and a personalized news feed – it's all here, just a click away!- Login Now!
Stay informed on Business News along with Gold Rates Today, India News and other related updates on Hindustan Times Website and APPs
SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Tuesday, March 19, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On