India's annual growth slows to 7.1%

[New Delhi] India's growth slowed to 7.1 per cent last year, according to official data released Wednesday, weaker than analysts expected but still the fastest rate of any major economy.

GDP growth for the 12 months ended March 31 was well below a revised figure of eight percent for the previous year, and follows the government's shock move last November to ban most of the currency in circulation.

"This is a sharper deterioration than what I expected," Ashutosh Datar, economist at IIFL Institutional Equities, told AFP.

"The fourth quarter (6.1 per cent) is a bit weaker than what I expected."

However the country of 1.25 billion is still reporting faster growth than rival China, at 6.7 per cent in 2016.

Prime Minister Narendra Modi has defended his move to remove all 500 and 1,000 rupee notes from circulation as a necessary strike against corruption.

The government argues it will boost revenues by dissuading people from using cash, which makes it easier to avoid tax.

The move triggered massive lines outside banks in the weeks afterwards as authorities struggled to print replacement notes fast enough.

While the full impact of the note ban is still not known, analysts had expected a pick-up in the fourth quarter as consumers who had held back in the weeks after the cash ban stepped up spending.

AFP