India recorded a Gross Domestic Product growth of 7.1% in the April-June quarter, lower than the 7.9% posted in the first quarter of the year, according to the Central Statistics Office. Despite this drop, India remains the world's fastest growing economy.
Economists had forecast a 7.6% GDP growth for India in the second quarter. The numbers reflect India's gains from falling global prices of energy in the past two years, as the country is a major oil importer, according to FT.
Retail inflation hit a 22-month-high in June, prompted by a sharp rise in the prices of vegetables, which pushed the Consumer Price Index to a 5.77% hike last month. Rural parts of the country recorded a higher inflation at 6.2% as compared to urban centres, where inflation was at 5.26%. Last week, investment bank Goldman Sachs in a report said India's economic growth will stand at 7.9% this fiscal, compared to 7.6% for 2015-'16.
Economic Affairs Secretary Shaktikanta Das was quoted by ANI as saying the GDP drop can be attributed to net indirect taxes going down and the government's higher subsidy expenditure. He added that service sector growth had increased, as well as exports (3.2%) and growth in the manufacturing sector was up (9.1%). Das also said that the Seventh Pay Commission and good monsoon will help boost the GDP in upcoming quarters.
Figures released from China for the corresponding period show the country’s GDP grew 6.7%, with a boost from infrastructure.