Economy Limps As GDP Falls to 5.7% in Q1, Down From 6.1% in March

The economy grew at 5.6 percent in gross value added (GVA) terms which is lower than the 7.6 reported a year ago.

The Indian economy grew at 5.6 percent in gross value added (GVA) terms in the first quarter of the current fiscal, showed data released by the government on Thursday. Growth in the April-June quarter was at par with the 5.6 percent expansion in GVA in the fourth quarter, and significantly lower than the 7.6 reported a year ago.

The country’s gross domestic product (GDP), which includes the impact of taxes and subsidies, grew at 5.7 percent in the first quarter compared to 6.1 percent in the fourth quarter.

Both GDP and GVA growth were below estimates. A Bloomberg poll had pegged GVA growth at 6.2 percent in Q1 of FY18.

GVA growth has become a preferred measure of economic growth as it strips out the impact of indirect taxes and subsidies. In particular, this fiscal, when the government has front-loaded subsidy expenditure and normal flow of indirect taxes has been disturbed due to the implementation of GST, growth in GVA provides a better indicator of trends in the economy.

Data released on Thursday suggests that the underlying momentum in the economy remains weak, with the transition towards the Goods and Services Tax (GST) adding another element of uncertainty.

The following are the year-on-year growth comparisons provided by the government:

• GVA growth in agriculture stood at 2.3 percent in Q1 compared to 2.1 percent last year
• GVA growth in manufacturing stood at 1.2 percent compared to 10.7 percent last year
• GVA growth in construction stood at 2 percent compared to 3.1 percent
• Trade, hotels and transport segment grew by 11.1 percent compared to 8.9 percent
• Finance, insurance and real estate grew at 6.4 percent compared to 9.4 percent

(The article was originally published on BloombergQuint)

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