India may miss growth target as GDP dips to 7%

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Old 01-Sep-2015
Post India may miss growth target as GDP dips to 7%

India’s GDP growth has slowed to 7 per cent in the April-June quarter from 7.5 per cent in the previous quarter amid deceleration in the agriculture, services and the manufacturing sectors.
The development may be a cause for concern for the government, which had claimed the growth would pick up in the remaining part of the year. The Union Finance Ministry officials had even cited several indicators to support its claim on a higher growth.
The Centre had set a target of 8.1-8.5 per cent growth for 2015 which, say experts, appeared difficult to achieve under the present circumstances. The only silver lining for the government is that the growth is better than last year: 7.5 per cent in January-March quarter against 6.7 per cent in the 2014 April-June quarter, according to data from the Central Statistics Office (CSO).
The bad news for GDP growth was accompanied by the dismal numbers for core sector growth, which slowed down to a three-month low of 1.1 per cent.
The Gross Value Added (GVA), a new concept introduced by CSO to measure the economic activity, also slipped during the first quarter to 7.1 per cent, from 7.4 per cent a year ago.
The data has come at a time when the Finance Ministry was pitching for a rating upgrade by Standard and Poor's citing strong macroeconomic indicators, low inflation and improvement in fiscal as well as current account deficits.
In his presentation to the visiting S&P officials, Chief Economic Advisor (CEA) Arvind Subramanian said the country had strong medium-term growth potential on the back of persistent economic reforms, which were being pursued by the government.
Analysts, however, said no significant recovery was expected in the next two quarters. Debopam Chaudhuri, Chief Economist & Vice President of Research at ZyFin Research, said, “We don’t see any significant recovery over the next two quarters with economic activity slumping further. Private consumption continues to remain less than 60 per cent of the GDP, suggesting low aggregate demand conditions.”
Industry body Assocham expressed slight concern over subdued growth performance of the economy. It expressed concern over anticipated slowdown in pace of reforms. “The government needs to keep pushing for more ground-level reforms and improving implementation so as to realise the economy’s true potential,” it said in a statement.

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