The economy lost steam in the April-June quarter, slowing to a three-year low as the impact of de-stocking by companies ahead of the roll out of the GST and lingering effects of note ban hurt growth.
The economy grew 5.7% in April-June, the first quarter of the current fiscal, slower than the previous quarter's 6.1% growth and lower than the 7.9% expansion posted in the first quarter of 2016-17. The June quarter growth is below China's 6.9% expansion in the April-June quarter and puts pressure on policymakers to unveil measures to revive the economy .
Growth in the June quarter was dragged down by sluggish manufacturing, construction and mining sectors while services and farm sectors held up. Growth was largely propelled by government spending. The subdued and weakened economic performance of the domestic economy indicates that the disruption caused by demonetisation has not run its course and GST implementation related disruption in business activity has further aggravated the economic vulnerability of the country.
Several economists pared their growth estimates for the current year but said robust monsoon rains, soft interest rates and greater boost to consumption in the months ahead should augur well. The restocking by companies after the implementation of GST should also help.