In what comes as a disappointment for the Indian economy, the nation’s gross domestic product (GDP) grew by 6.1 per cent in the last quarter (January-March) of the 2016-17 financial year, government data showed on Wednesday.
With this, India has lost its status of the world’s fastest growing economy, superseded by China whose GDP grew 6.9 per cent during the same quarter.
The GDP growth estimates for the next financial year remained unchanged at 7.1 per cent. In the previous quarters (October-December), the country’s GDP grew at 7 per cent.
"Real GDP at constant (2011-12) prices for the year 2016-17 is estimated at Rs 121.90 lakh crore showing a growth rate of 7.1 percent over the year 2015-16 of Rs 113.81 lakh crore," the Central Statistics Office (CSO) said in a statement.
In terms of gross value added (GVA), which excludes indirect taxes, the growth came in even lower at 6.6 percent over the GVA for 2015-16.
The GDP data for the last quarter was expected to get a boost from the revision in the Index of Industrial Production (IIP) and Wholesale Price Index (WPI) series to the 2011-12 base.
The GDP data is likely to come as a disappointment for the Narendra Modi government that completed three years at the Centre last week.
PM Modi's demonetisation drive that outlawed high-value currency notes last year in November in a bid to curb black money likely had an impact on the GDP numbers.
Addressing a press conference after the data was released, India's Chief Statistician TCA Anant agreed that like a lot of factors, the note ban decision too had a bearing on the fall in numbers, but refused to hold it solely responsible for it.
"The numbers for the fourth quarter do show a fall but demonetisation is not the only reason behind it. There is still a lot of dynamism in the economy which is evident through the numbers for the previous quarter. There are a lot of numbers that go behind annual estimates and there is not one reason alone behind it," he said.
TCA Anant said that all policies have a bearing on the GDP and even demonetisation has also had an impact. "But it is very difficult to arrive at a conclusion that this (notes ban) alone has contributed to the fall in GDP," he added.
Almost all sectors, with the exception of agriculture, showed deceleration in the aftermath of demonetisation.
While the manufacturing sector output in the fourth quarter slowed to 5.3 per cent versus 12.7 per cent in the same period of last year, the construction sector slipped into the negative territory.
Thanks to good monsoon, the agricultural sector posted a huge jump in growth as it expanded by 4.9 per cent during 2016-17 compared to dismal growth of 0.7 per cent in the previous year.
In the fourth quarter itself, the agriculture sector GVA rose by 5.2 per cent as compared to 1.5 per cent in the same period of 2015-16.
The data further said the per capita income during 2016-17 is estimated to have attained a level of Rs 1,03,219 as compared to the estimates for the year 2015-16 of Rs 94,130 showing a rise of 9.7 per cent.
Notably, US ratings agency Moody’s Investors said on Wednesday that the Indian economy will grow at 7.5 per cent in the current fiscal, which will accelerate to 8 per cent in about four years.
"We expect marginally faster growth in India. According to our forecast the economy will grow 7.5 per cent in fiscal year 2017 (2017-18) and 7.7 per cent in fiscal year 2018 (2018-19)," Moody's Investors Service said in its Global Macro Outlook.
"Overall, we continue to believe that economic growth will gradually accelerate to around 8 per cent over the next three to four years," it said,
The American agency also said that the negative impact of the November 8 demonetisation of high-value currency on the economy was limited in size and duration.
"The ruling BJP's victory in the Uttar Pradesh state elections indicates that the government has remained politically popular despite the demonetisation exercise," the report said.
The government has pushed through major reforms like further liberalising foreign direct investment (FDI) rules in a number of key sectors, the Direct Benefit Transfer scheme for food, fertiliser and kerosene subsidies, the Goods and Services Tax (GST) and a National Bankruptcy Code.