• PRE-GST DE-STOCKING HAS IMPACTED MANUFACTURING SECTOR GROWTH

  • The Q1 GDP numbers are concerning the government. He said the GDP data from Q1 challenges the government to revive and improve the growth rate.  India's GDP growth slumped to a three-year low of 5.7 per cent during April-June.  Manufacturing growth has gone down from 3.1 per cent to 1.6 per cent. Finance Minister reasoned that the decline is due to the impact of GST. Finance Minister said that most manufacturers were destocking and their sales continued to increase, leading to an improvement in the services growth. The finance minister said that if that was the trend, this would be the bottoming out as far as manufacturing was concerned, and that it would only improve from here.  Finance Minister said that it was a positive trend that the global economy was at a high, and that would lead to a continuation of FDI, which would help the economy. The monsoon seemed largely normal, which would ensure that the growth numbers. Finance Minister also said that domestic public investment would continue to be high. 

    Finance Minister said another factor to consider would be the insolvency proceedings would also stabilize the banking sector. The Finance Minister said that the Q1 numbers reflected the pre-GST trend were manufacturers de-stocked and waited for the new GST rates.  Finance Minister also said that depending on revenue flexibility, there will be a need for both the state and central Government to ensure that capital expenditure and not just revenue must be treated carefully, looking for investments. 

     

     

    (SOURCE: THE ECONOMIC TIMES DATED 31.08.2017)

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