GDP growth slowed mainly due to subdued performance of mining, construction and farm sectors. The economy had expanded at 7.5 per cent in the April-June quarter of last financial year, 2015-16.
The growth was 7.9 per cent in the January-March period -- fourth quarter of last fiscal.
The previous low of GDP growth was 6.6 per cent in the October-December period of the 2014-15 fiscal.
Besides, the growth of eight core infrastructure sectors slowed to 3.2 per cent in July compared to 5.2 per cent in June this year due subdued performance of coal, fertilisers, steel, cement and electricity segments.
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"Given the good monsoon which we had this year, the 7th Pay Commission payout effect and various structural reform measures which the government has taken we expect the growth to be higher than what we achieved last year (7.6 per cent), perhaps close to 8 per cent," Economic Affairs Secretary Shaktikanta Das told reporters.
Industry body Assocham suggested that policy makers take steps to free up the credit flow to productive sectors of the economy so that current growth is supported.
The economic activities which registered growth of over 7 per cent in the April-June quarter, over year-ago period, are manufacturing; electricity, gas, water supply & other utility services; trade, hotels, transport & communication and services related to broadcasting; financial, insurance, real estate and professional services and public administration, defence and other services.
The worrying factor, however, has been decline in the
Gross Fixed Capital Formation which is an indicator of investment activity in the economy.
"Lower industrial growth & negative growth in gross fixed capital formation being analysed. Proactive policy responses of Govt will continue," Das said in a tweet.
However, on the positive side, the growth in private final consumption expenditure at current prices, which is an indicator of demand in economy has grown at 11.7 per cent in first quarter.
Commenting on the GDP data, FICCI president Harshavardhan Neotia said that although the first quarter numbers reported moderation, "we expect growth to gain momentum in the second half of the current fiscal year. The good monsoon is a huge positive and an improvement has been noted in the kharif acreage. The agriculture sector performance is likely to pick up giving an impetus to rural consumption."
The agriculture, forestry and fishing sector has shown a growth of 1.8 per cent in its GVA during the first quarter of this fiscal as against the growth rate of 2.6 per cent in the year-ago period.
Growth in mining and quarrying was (-)0.4 per cent during the first quarter as against the growth rate of 8.5 per cent in the corresponding period of last fiscal.