As per the government data released on Friday 29th May 2020 it is lowest in the last 44 quarters.
Fourth-quarter GDP numbers released by the statics department of the country are in sharp contrast with the advanced estimates released by the government, which saw Q4 GDP growing at 4.6%.
Overall growth for FY 2019-20 crash to 4.2 % that is weakest so far since FY 2008-09 when GDP was 3.09% compared to 6.1% growth in FY 2018-19, the Central Statistics Office (CSO) said.
In also addition CSO said that “Given the global COVID-19 pandemic and consequent nationwide lockdown measures implemented since March 2020; the data flow from the economic entities has been impacted. As some of these units are yet to resume operations and since the statutory timelines for submitting the requisite financial returns have been extended by the Government, these Estimates are based on the available data. Consequently, the estimates (Quarterly as well as Annual) are likely to undergo revision”.
Nationwide lockdown due to pandemic of COVID-19 was imposed from 24 March, 2020, which shrank the economic activities as the government kept shopping malls closed and people put a curb on travel and dining out to keep themselves protected from getting infected by the virus.
As compared to the earlier estimate in Q1 and Q2 of FY 2019-20 GDP growth was at 5.2% and 4.4% as compared to earlier estimates of 5.1% and 5.6%, respectively.
Whereas in the third quarter of FY 2019-20, India’s economy grew at 4.1% as compared to an earlier estimate of 4.7%.
Dhiraj Relli, MD & CEO, HDFC Securities, said that “The Q4 FY 2019-20 GDP number came in better than expected at 3.1% (11 year low) though the downward revision in the previous three quarters takes away some of that relief. The poor data on the growth of India’s eight infrastructure sectors contracting by a record 38.1% in April led by cement, steel, electricity, and coal was partly on expected lines. However, this data does not portend well for Q1 FY 2020-21 unless we see a fast and complete lifting of the lockout with safeguards in place.”
India’s GDP expanded at 4.7% in Q3, at 5.1% in the Q2 quarter, and 5 % in the Q1 of FY 2019-20.
Arjun Mahajan, Head, Institutional Business, Reliance Securities, said that “The 4Q GDP no at 3.1% vs consensus of 2.2% is much better. Full-year FY 2019-20 GDP 4.2% vs consensus of 4.4% is a miss. Farm sector growth of 5.9% in 4Q is the savior. Manufacturing for 4Q came in at -1.4%. There has been a downward revision for 1Q, 2Q, and 3Q FY 2019-20 GDP nos. What needs to be considered is that the April core sector data has been negative on all counts and this will be a drag on the Q1 FY 2020-21 numbers.”
GVA (Gross Value Added), which is measured as GDP minus tax collections and is seen as a more realistic gauge to measure economic activity, grew by 3% in the January-March 2020 while for the full year, GVA growth stood at 3.9%.
According to another set of economic data released by the government on 29th May, 2020 India’s core sector output contracted 38.1% in April, marking the worst performance by the key infrastructure sectors since 2005. It was the second consecutive contraction in the core sector output. In March 2020, the growth rate of Index of eight core industries contracted by 9%.
However, the data released by the government is likely to undergo massive revision as data from many entities have not been received due to the outbreak of COVID-19 pandemic.