New Delhi: The Indian economy hit a bump in 2016-2017 ( 1st April 2016 to 31st March 2017) seeing the slowest growth in three years at 7.1 per cent as the country took controversial decisions to demonetise Rs 500 and 1000 notes to tackle the problem of black money.
The GDP growth in January to March 2017 --- quarter immediate after demonetisation announced on 8th November ---- fell to 6.1 per cent, well below market expectations as construction and manufacturing bore the brunt of the note ban. Due to slow growth in January-March period India has lost its tag of the fastest growing major economy to China, which grew by 6.9 percent in the first three months of 2017. This is bad news for Modi government which is celebrating three years in power and is set to roll out major tax overhaul GST from July 1, whose impact on economic activity in initial months is uncertain.
GDP had grown by 8 percent in 2015-16, 7.5 percent in 2014-15 and 6.4 per cent in 2013-14, according to new series.
Opposition was quick to attack the government over poor GDP growth in the last quarter of FY17. "Even after creating a new series and playing with data, the GDP growth rate is mere 6.1 percent (fourth quarter FY17).... Internal security is in a mess, economy is slowing down, social fabric is being torn apart: government is celebrating three years of great governance," tweeted CPI (M), general secretary, Sitaram Yechury.
GDP growth has displayed a downtrend over the quarters of 2016-2017, from 7.9 percent in first quarter to 7.5 percent in second quarter to 7 percent in third quarter and further to 6.1 percent in fourth quarter.
"The distinct downtrend in GDP growth over the quarters of FY2017 suggests that the slowdown in growth that had already set, was intensified by the note ban... The steady uptick in growth seen upto FY2016 has been interrupted in FY2017, despite the sharp turnaround in agriculture," said Aditi Nayar, Principal Economist, at rating agency ICRA.
