Free fall in GDP numbers shows more structural than transient

Vastavam web:  India’s GDP growth was expected to decline in the first quarter of the current fiscal but the “free fall” in the numbers shows that the problem is more structural than transient, says a report.India’s economic growth slipped to a three-year low of 5.7 per cent in April-June, underscoring the disruptions caused by uncertainty related to the GST rollout amid slowdown in manufacturing activities.The report, which analysed data of 1,695 listed firms, noted that there is significant destocking in both in consumer and investment intensive sectors in 2016-17, implying that “there was general slowdown amidst which companies have been running down the existing inventory”.
Investment intensive sectors, it said, have been more affected by the general slowdown and uncertain environment in 2016-17, while consumer intensive sectors have been more affected by demonetisation.Important sectors in manufacturing like capital goods, consumer goods & engineering goods have performed dismally and this is a cause of concern, it added.