Reduction in inventory ahead of the Goods and Services Tax and not demonetisation impacted growth in the April-June period, Economic Affairs Secretary Subhash Chandra Garg told BloombergQuint as the economy slumped in the first quarter of the fiscal 2017-18.
The manufacturing industry, in particular, has decelerated on account of destocking, Garg said, echoing Finance Minister Arun Jaitley's statement earlier in the day. The services sector has meanwhile improved keeping the gross value added growth at the same level as January-March.
Services sector grew 8.7 percent for April-June as compared to 9 percent year ago.
Garg also said that a higher fiscal deficit is not a major cause of concern as it was on account of front-loading of government expenditure. Fiscal deficit for April-July reached 92.4 percent of the budget estimate.
Additional Dividend By RBI
Garg said that the government would discuss the possibility of an additional dividend from the Reserve Bank of India as a lower surplus from the central bank was not accounted for in the Budget.
“As the government had more expectation of dividend in the budget, we need take it up with the RBI, discuss the capital framework and discuss the possibility whether we can have some more transfers this year,” he said.
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