Finance Minister Arun Jaitley on Thursday said the decline in India’s Gross Domestic Product growth in the first quarter of 2017 was a matter of concern. India’s GDP slowed to 5.7% in the April-June quarter from 7.9% in the corresponding period last year.
He blamed the slow growth on the Goods and Services Tax, which was launched on July 1.
“In the coming quarters, we really require, both in terms of policy and investment, to work and improve upon these figures,” Jaitley said at a press briefing after the Centre released the latest GDP numbers. “The contradiction between the improvement in services and the decline in manufacturing is essentially the impact of the GST.”
The finance minister explained that as manufacturers were selling pre-stocked items, trade was not affected. But the manufacturing sector saw a major dip because products were not being manufactured.
“Manufacturing bottomed out in the first quarter, but services improved,” Jaitley said, adding that since monsoon has been good overall, it should have a positive impact on the economy.
He also believes that domestic public investment will rise as the revenue trend has been positive.
The core sector for July, when the GST was implemented, saw a growth of 2.4%. Although the figure stands higher than that in June, it was driven by three sectors – natural gas, steel and electricity – according to Care Ratings. For the first four months of the current financial year, growth was 2.4% compared with 6% last year.
Opposition criticises Centre for the low figures
Not one to miss an opportunity to criticise the government, the Congress said it was a “reckless decision” to demonetise Rs 500 and Rs 1,000 notes in November 2016.
“The country has suffered because of the ego of the prime minister,” senior Congress leader Anand Sharma said, according to PTI. “The finance minister has failed to make amends but is happily busy being an apologist for the prime minister’s wrong decisions.”
Congress spokesperson Randeep Surjewala said GDP growth had declined from 9.2% to 5.7% in the last six quarters under Narendra Modi.