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After GDP jolt, this is what is critical for Narendra Modi government

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Given the economy has been losing pace for several quarters now, and that the trend was noticeable even before demonetisation, the June quarter was never really expected to see a big bounce-back. However, the very sharp deceleration in GDP, at 5.7% y-o-y, and in GVA, at 5.6% y-o-y, are below even the most conservative forecasts. In fact, even during a very difficult time in Q4F17, GDP had clocked a reasonably good 6.1% y-o-y while GVA had grown at 5.6% y-o-y. This time around, the GDP has decelerated more than the GVA partly because of a big jump in subsidies during the quarter, up 40%-plus.

Not surprisingly, the manufacturing sector has borne the brunt of the GST rollout with companies compelled to resort to production cuts and to staying lean on inventory ahead of the new indirect tax regime in July. The........

© The Financial Express