Govt admits economy slowed down in 2016-17

New Delhi: The Indian economy slowed down in 2016-17, with the gross domestic product (GDP) declining drastically from 8 per cent in 2015-16 to 7.1 per cent, the government said on Friday, but added that the graph will soon be on an upward swing.

Finance minister Arun Jaitley said slower economic growth reflected lower growth in the industry and the services sectors due to structural, external, fiscal and monetary factors.

Replying to a question in Lok Sabha, Mr Jaitley said that for the last three consecutive years, India has remained the fastest growing economy in the world. He made the assertion after TMC MP Saugata Roy said that the country’s growth rate had plummeted to an all-time low of 5.7 per cent in the first quarter of 2017-18.

The finance minister said that Mr Roy’s phraseology was somewhat exaggerated.

Even the IMF and the World Bank have said that India will be the second fastest growing economy, he pointed out. Therefore, to exaggerate and say that we have hit the bottom and that a “rot” has set in is somewhat not correct, Mr Jaitley added.

Mr Roy, however, clarified that he used the word “rut” not “rot”, to which the finance minister replied that rut was worse than rot.

Sharing figures to highlight that the economy’s fundamentals were strong, Mr Jaitley said, “In the first quarter, if one analyses the data in detail, the services sector rose by 8.7 per cent which was quite robust, which actually meant that people were making purchases,” the finance minister said.

“The second quarter figures reflect that there was no effect of demonetisations,” he said.

Mr Jaitley said that the government has taken various initiatives to boost growth, including giving a fillip to manufacturing, concrete measures for transport and power sectors as well as urban and rural infrastructure, comprehensive reforms in foreign direct investment policy and special package for textile industry.

All indications seem to suggest that in the coming quarters the curve is going to be on an upward swing, he added.

The GDP had slowed down to lowest pace in three years at 7.1 per cent in 2016-17 from 8 per cent in 2015-16 and 7.5 per cent in 2014-15.

In the current fiscal year, the GDP had grown by 6.3 per cent in the second quarter (July to September) after falling to 5.7 per cent in the first quarter (April to June) — the lowest in three years.