New Delhi, Aug 31 (IANS) India’s gross domestic product (GDP) slowed to 7.1 per cent for the first quarter of this fiscal, from 7.5 per cent in the like period of 2015-16, due mainly to lower activity in farm, mining and construction sectors, official data showed on Wednesday, even as industry said the numbers reflected a moderation of growth impulses.
In terms of gross value added (GVA) — considered a better measure of economic performance, as it excludes taxes and subsidies — the growth was a tad higher at 7.3 per cent, against 7.2 per cent in the previous year, as per data released by the Central Statistics Office (CSO).
The government has targeted the GDP growth to top 8 per cent this fiscal, mainly on the back of a normal monsoon season. The growth rate of the entire previous fiscal — at 7.6 per cent — had made India the fastest expanding economy globally, overtaking China.
Worryingly, the gross fixed capital formation — a monetary measure of activities like building of roads, schools and hospitals, investments in plant and machinery, and construction of ports, and railways assets — fell to 29.6 per cent of GDP from 32.7 per cent in the previous year.
This apart, the government’s final consumption expenditure — which represents the value of what the state procures for individuals and households, as also social transfers like subsidies — shot up by a whopping 24.4 per cent.
Within the GVA, the manufacturing activity expanded faster at 9.1 per cent, against 7.3 per cent in the first quarter of the previous quarter. Government services, including defence, also logged a robust growth of 12.3 per cent, against 5.9 per cent.
But the primary sector, including agriculture and fisheries, saw a much lower growth of 1.8 per cent, against 2.6 per cent, while that for construction also fell sharply to 1.5 per cent from 5.6 per cent.
Mining output, which had expanded by 8.5 percent in the first quarter of the previous fiscal, shrank (-)0.4 per cent.
Commenting on the GDP numbers industry chamber, FICCI President Harshavardhan Neotia said: “The first quarter numbers released today reported moderation. However, we expect growth to gain momentum in the second half of the current fiscal year.
“The good monsoon is a huge positive and an improvement has been noted in the kharif acreage. The agriculture sector performance is likely to pick up giving an impetus to rural consumption.
Also, the Seventh Pay Commission is expected to push demand. This uptick is likely to give a thrust to industrial growth as well,” he added.
Industry body Assocham said in a statement that the estimate of GDP at constant price signals “moderate slow down in the economic growth” as compared to the same quarter of last year.
“Policy actions and initiatives taken by government and RBI have had marginal positive effects on economic growth in India and have helped in restoring the economic stability in India against global economy which is volatile and weak,” said its Secretary General D.S. Rawat.
“Private consumption remained the mainstay of the modest acceleration in real GDP growth, as in 2014-15 and 2015-16, while fixed investment and exports are missing drivers due to new business orders slowing and weak external demand, respectively,” he added.