Q1 GDP decline due to de-stocking by firms: Chief Statistician

Chief Statistician of India T.C.A. Anant on Thursday said the slowdown in GDP growth for the first quarter of 2017-18 to 5.7 per cent was due to de-stocking by firms as caution ahead of the GST roll-out on July 1.

“Major sector which has seen a sharp decline is industry. Corporate entities were pulling down their stocks in Q1 (April-June), which seems to be in anticipation of Goods and Services Tax (GST) price labelling effect,” Anant told media persons here after GDP numbers for the first quarter were released.

He said the phenomenon was usually not observed as firms accumulated stocks ahead of the festive season.

The Chief Statistician said there was a likely revival from the second quarter onwards as subsequently stocks would be restored to normal levels as GST progressed.

According to data from the Central Statistics Office (CSO), the GDP for Q1 stood at Rs 31.10 lakh crore, or a growth of 5.7 per cent, compared to 6.1 per cent in the fourth quarter of the last fiscal.

The drop in growth was even sharper compared with the like quarter a year ago when the country’s GDP grew at 7.9 per cent.

Anant said though the growth was a result of multiple factors, it should not be linked to demonetisation.

“The major reason for slowdown in growth at 5.7 per cent is on account of manufacturing, where gross value added (GVA) is largely contributed by the private sector. In all, 74 per cent of the GVA comes from corporate sector. Its performance has been poor, though the sales growth is good,” he said.

The GVA in manufacturing was showing a declining trend from Q2 of the last fiscal, which has continued, he added.

Anant noted that another reason for the fall in growth rate was rise in costs on account of prices in intermediate inputs, which has been much higher than last year.

He said services and crop production have seen an increase in the first quarter.

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