It was expected by most of us, since the pandemic started taking it’s grip on the economic activity. A general economic slowdown was all expected because of the global Covid-19 lockdown. The numnbers revealed yesterday, showed that India’s GDP growth rate down to 3.1 per cent in the last quarter of 2019-20.
The Q4 growth rate was slower than 4.1 per cent in Q3 and 5.7 per cent reported for the like period of the previous fiscal.
Moreover, it is not only COVID-19 that impacted the GDP growth in the last three months only, but the GDP was also anyway coming down. Consequently, India’s FY20 GDP declined to 4.2 per cent from 6.1 per cent in FY19. This is the slowest rate of India’s GDP growth in the last 11 years.
However, the rate, if looked at from the prism of constant prices at 2011-12 prices, would still be the lowest in the last 8 years.
“Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in the year 2019-20 is now estimated to attain a level of Rs 145.66 lakh crore, as against the First Revised Estimate of GDP for the year 2018-19 of Rs 139.81 lakh crore, released on 31st January 2020,” the National Statistical Office (NSO) said.
“The growth in GDP during 2019-20 is estimated at 4.2 per cent as compared to 6.1 per cent in 2018-19.”
“GDP at Constant (2011-12) Prices in Q4 of 2019-20 is estimated at Rs 38.04 lakh crore, as against Rs 36.90 lakh crore in Q4 of 2018-19, showing a growth of 3.1 per cent.”
On a sequential basis, the quarterly growth rate has progressively come down from 5.2 per cent in Q1 of 2019-20 to 4.4 per cent in Q2 and 4.1 per cent in Q3.
Last fiscal, the Indian economy faced a severe demand slowdown on account of high GST rates, farm distress, stagnant wages and liquidity constraints.
Additionally, the national lockdown implemented to curb the Covid-19 outbreak has dealt a severe blow to the economy.
However, the NSO said that these estimates on quarterly as well as annual basis are likely to undergo revisions.
“In view of the global Covid-19 pandemic and consequent nationwide lockdow nmeasures implemented since March 2020, the data flow from the economic entities has been impacted,” the NSO said.
“As some of these units are yet to resume operations and owing to the fact that the statutory time-lines for submitting the requisite financial returns have been extended by the government, these estimates are based on the available data.”
Besides, the NSO data showed that Gross Value Added (GVA) growth rate during the fourth quarter of 2019-20 on a YoY basis fell to 3 per cent, from 5.6 per cent during the like period of the previous fiscal.
Similarly, the GVA growth rate during 2019-20 on a YoY basis declined to 3.9 per cent, from 6 per cent during the like period of 2018-19.
The GVA includes taxes but excludes subsidies.
As per the estimates, the growth in the ‘agriculture, forestry and fishing’ is estimated to be 5.9 per cent from YoY growth of 1.6 per cent and ‘mining and quarrying’ of 5.2 per cent from (-) 4.8 per cent.
On the other hand, ‘manufacturing’ is (-) 1.4 per cent from a YoY rise of 2.1 per cent and construction activity plunged by (-) 2.2 per cent from 6 per cent.
Furthermore, the GVA growth rate of ‘electricity, gas, water supply & other utility services’, ‘trade, hotels, transport, communication and services related to broadcasting’, ‘financial, real estate and professional services’ and ‘public administration, defence and other services’ respectively also declined during this period.
Another key growth gauge — Gross Fixed Capital Formation — which underscores the overall acquisition of produced assets in the economy, at constant (2011-2012) prices, is estimated to have declined to 28.8 per cent from a YoY rise of 31.7 per cent in Q4 of 2018-19.
For 2019-20, the GFCF fell by (-) 2.8 per cent from a YoY rise of 9.8 per cent in the previous fiscal.
Commenting on the GDP data, D.K. Aggarwal, President, PHD Chamber of Commerce and Industry, said: “We are optimistic that the growth will revive in the second half of the financial year 2020-21 on the back of various reform measures announced by the Government during the last few weeks.”
India Ratings & Research’s Chief Economist Devendra Kumar Pant said: “From production side, the growth was driven by agriculture and public administration. Government expenditure has helped both GVA and GDP growth.”
“Going forward, with private expenditure growth dwindling due to the shutdown and labour migration, investment demand contracting due to weak consumption demand and stretched corporate balance sheet, government expenditure will again be the growth engine in FY21.”
According to Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research: “The figures for FY20 largely reflect the intensification of the economic slowdown that started to build up from Q2/Q3 of FY19. The gradual slowdown in the growth trajectory is indicated in the revised quarterly GDP figures and the estimated print for FY20 at 4.2 per cent as compar ed to 6.1 per cent in FY19.”
“Clearly, the growth momentum got further dampened towards the year end due to the economic disruption from the virus outbreak that already started a couple of weeks before the onset of the pan India lockdown in the last week of March.”