Indian economy grows at slowest pace under Modi government, hits 3-year low of 5.7% in April-June

New Delhi: India's GDP growth slipped to 13-quarter low of 5.7 percent year-on-year during the April-June quarter as compared to 6.1 percent in January-March, government data showed on Thursday.

The GDP growth rate for the same quarter last year was 7.9 percent.  The previous low of 4.6 percent was recorded in January-March 2014.

The slowdown was led by the manufacturing sector, which expanded at 1.2 percent from a year earlier compared with a 10.7 percent growth last year.

According to the data released today by the Central Statistics Office (CSO),  over 7 percent growth was recored by trade, hotels, transport and communication and services related to broadcasting, public administration, defence, electricity, gas and water supply.

The growth in the ‘agriculture, forestry and fishing’, ‘mining and quarrying’, ‘manufacturing’,  ‘construction’  and  financial, insurance, real estate and professional services were at 2.3 percent, (-) 0.7 percent, 1.2 percent, 2 percent and 6.4 percent respectively during this period.

Besides, the growth of eight core infrastructure sectors slowed to 2.4 percent in July compared to 3.1 percent during the same month last year. Cumulatively, the eight core sectors in April-July recorded a growth of 2.5 percent as against 6 percent in the same period a year ago.

Today's GDP data shows that India is still behind the China which last reported growth of 6.9 percent.

India's growth slipped to a three-year low of 7.1 percent in 2016-17 on account of poor performance of manufacturing and services sectors. The GDP growth was at 8 percent in 2015-16 and 7.5 percent in the previous year.

Achieving the high end of the 6.75-7.5 percent growth projected previously will be difficult due to appreciation of rupee, farm loan waivers and transitionary challenges from implementing GST, the second part of the Economic Survey had said.

The Survey had stated that the balance of risk to achieving the 6.75-7.5 percent growth has shifted to the downside.

The Reserve Bank in its policy review meet this month had lowered its key lending rate by 0.25 percent, a move which is likely to translate into lower interest rates for home, auto and other loans as also boost economic activity.

On November 9, 2016, the government had demonetised higher value currency which wiped off about 87 percent of notes in circulation, leading to a severe cash crunch and disruption in the economic activities.