New Delhi (AFP)

India's government said Friday that the economy would grow by 7.1 percent in the financial year ending in March, slower than the growth registered during the previous year, amid warnings of a cash crunch hitting business activity.

"The growth in GDP during 2016-17 is estimated at 7.1 percent as compared to the growth rate of 7.6 percent in 2015-16," the statistics ministry said in a statement.

The announcement came as analysts warned of an economic slowdown in the country following Prime Minister Narendra Modi's shock decision to ban 86 percent of India's currency in November.

But India's chief statistician TCA Anant said the ministry's GDP estimate did not consider economic data from November or December.

"It was felt in view of the policy of denotification of notes there is a high degree of volatility in these figures and (a) conscious decision was taken not to make projection using the November figure," Anant told journalists.

A dip in manufacturing and construction activity contributed to the slowdown, according to the statement released by the ministry.

Prime Minister Modi's move to ban 500 ($7.50) and 1,000 rupee notes sparked turmoil in the cash-reliant nation, generating long queues outside banks and ATMs, as people struggled to swap their old currency for newer bills before the deadline expired on December 30.

Former prime minister Manmohan Singh -- whose economic reforms are credited with rescuing India from the brink of bankruptcy in the early 1990s – was critical of the decision and said it could shave two percentage points from the country's GDP.

Ratings agency Fitch also lowered its India growth forecast for the 2016-2017 fiscal year from 7.4 percent to 6.9 percent, following the currency ban.

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