Bhubaneswar: The slowing of India’s economic growth to a 15-month low of 6.7 per cent in the April-June quarter was due to slow down in government spending in the wake of the enforcement of the model code of conduct for the recent polls.
The RBI had projected a growth rate of 7.1 per cent for the April-June quarter of this fiscal.
“The Reserve Bank projected a growth rate of 7.1 per cent for the first quarter. However, the first advance estimation data released by the National Statistical Office showed the growth rate at 6.7 per cent,” RBI Governor Shaktikanta Das said here today.
The components and main drivers responsible for the GDP growth like consumption, investment, manufacturing, services and construction have registered a growth of more than 7 per cent, he said.
Based on his quick analysis of the growth figures, though he is yet to get a detailed report from the monetary policy team of the RBI, Das said that private consumption – a proxy for consumption demand – in the first quarter has grown by 7.4 percent against 4 percent in the fourth quarter of the previous fiscal year.
Investment has grown by 7.5 percent, industries sector has grown by 7.4 percent, manufacturing has grown by 7 percent, services sector has grown by 7.7 percent and construction sector has grown by 10.5 percent, he said.
Only two aspects have pulled the growth rate slightly down. Those are—government (both central and state) expenditure and agriculture, the RBI governor pointed out.
Shri Das said the government expenditure was low during the first quarter perhaps due to elections (April to June) and operation of model code of conduct by the Election Commission.
“We would expect the government expenditure to pick up in coming quarters and provide the required support to growth,” the RBI Governor said.
Similarly, the agriculture sector has recorded a minimal growth rate of around 2 per cent in the April to June quarter.
Despite slow growth in the agriculture sector in the first quarter, Shri Das said, “Monsoon initially made a slightly late start but it has covered large parts of the country except a few parts in eastern and northern India.”
“Under these circumstances, we have reasonably confident expectations that the annual growth rate of 7.2 per cent projected by the RBI will be materialized in coming quarters,” the Governor asserted.
“The credit growth is 10 percent vis-à-vis 4 percent last year. We see big confidence in all business houses. Two important things are happening – capacity utilisation in the manufacturing sector is 76 percent, which is all-time high, and the balance sheets of banks and corporates are de-leveraged. Corporates have reduced their liabilities by reducing their debt,” he said.
Addressing a National Conference of chartered accountants (CAs) here, Shri Das advised the CAs to do a true diagnosis of health of a company like doctors.
Today, in the age of AI and technology, one can put up the numbers provided by the organization and conduct the audit. However, the role of auditor is extremely important as it is the task before the auditor to see if the figures provided by the management are correct and truthful, he said.