The Indian economy grew at 6.1 percent during the March 2017 quarter (Q4) and in the process, lost the tag of being the world's fastest-growing economy to China that grew at 6.9 percent during the three-month period.
The government released the provisional gross domestic product (GDP) data for Q4 and for the financial year 2016-17 on Wednesday evening. The weak numbers are likely to spoil the party on the stock markets when trading commences on Thursday.
"GDP at constant (2011-12) prices in Q4 of2016-17 is estimated at Rs 32.28 lakh crore, as against Rs 30.42 lakh crore in Q4 of 2015-16, showing a growth rate of 6.1 percent," a government statement said, adding GVA (growth minus taxes) showed a growth of 5.6 percent.
For the financial year 2016-17, GDP at constant (2011-12) prices came at 7.1 percent, lower than 7.9 percent registered in 2015-16 (revised in February this year from the earlier 7.6 percent).
"Real GDP or GDP at constant (2011-12) prices for the year 2016-17 is estimated at Rs121.90 lakh crore showing a growth rate of 7.1 percent over the year 2015-16 of Rs 113.81 lakh crore," the statement said.
The World Bank had projected India's 2016-17 growth rate to slow down to 6.8 percent.
Analysts blamed the weak numbers to demonetisation.
Devendra Kumar Pant, Chief Economist at India Ratings & Research, said: "The impact of demonetization is clearly visible in fourth quarter GVA growth of manufacturing (declined to 5.3% from 8.2% in third quarter) and trade hotels, transport & communication and services related to broadcasting (declined to 6.5% from 8.3% in third quarter)," he said in a note.
Kotak Mahindra Bank's senior economist Upasna Bhardwaj expressed a similar view.
"The sharp slowdown in Q4FY16-17 continues to reiterate the fact that demonetization has taken a toll on FY17 growth, and this conforms with the already tepid high frequency data. While the slowdown in the economy was already visible before demonetization, it became more pronounced in the second half of the financial year," she said in a statement.
"Going ahead, we expect the consumption led story to continue and it will remain the key catalyst of growth aided by easing financial conditions, higher rural wages and boost from impending salary hikes for state, with exports providing further support. However, lower budgeted growth in the general government spending, a key contributor to growth, compared to FY17 along with complete absence of private investment is expected to continue to drag on overall growth," she added.
In Q4, from a sectoral viewpoint, agriculture, forestry and fishing grew at 5.2 percent, mining and quarrying at 6.4 percent, manufacturing at 5.3 percent, electricity, gas, water supply and other utility services at 6.1 percent while construction declined 3.7 percent. Trade, hotels, transport and communication posted 6.5 percent growth while financial, real estate and professional services grew at 2.2 percent.
The Q4 growth rate was also the lowest as compared to the previous three quarters in 2016-17 (7.2 percent in Q1, 7.4 percent in Q2 and 7 percent in Q3).
