India's growth slumped to 5.7 per cent in the first quarter of the financial year - weighed down by slow growth in construction following demonetisation - official data showed.
Two large economic reforms undertaken by Prime Minister Narendra Modi's BJP government -- the goods and services tax (GST), and the demonetisation of high value currency are perceived to be the reason for the slowdown.
The combination of higher discounts preceding the roll-out of GST and an increase in wholesale price inflation pulled down growth, Reuters quoted an analyst as saying.
"The lingering impact of demonetisation is visible in the low growth of construction. The GDP and GVA (growth value added) estimates have undershot our and market expectations by a considerable degree.
"The combination of lower volumes and higher discounts pre-GST (goods and services tax) and positive WPI (wholesale price inflation) weighed upon the manufacturing sector in Q1," Aditi Nayar, an economist with credit rating agency ICRA, told Reuters.
The figures released by the Central Statistics Office were lower than the 6.1 per cent recorded in the previous quarter, and less than forecast by many economists in one of the world's fastest growing economies.
India's economic growth still lags far behind that of regional rival China, which grew at 6.9 per cent over the same period.
Last year, India's economy grew at 7.1 per cent for the first quarter.
In February, the government had forecast GDP growth of between 6.75 per cent and 7.5 per cent for 2017/18.
However, in a survey released August, the government warned several factors including the introduction of the GST and appreciation of the Indian currency, could drag on growth.