GDP data for the third quarter is a positive surpise at 4.7%.GVA or gross value added is20 basis points lower at 4.5%. For the FY20, the GDP estimate remains static at 5%. Mining sector growth comes in at 3.2% Y-o-y.
Farm sector growth has come in at 4.5%.
And though the Indian economy so far has remained immune to the infection, it is seen that India being densely populated too may feel its heat.
Expectations for GDP Q3FY20
Analysts at Kotak Mahindra view GDP to remain at the same levels at 4.5% as recorded in the previous quarter ended September. However some expect the economic growth to slightly pick up to 4.7% levels.
Here are some of the key points suggested from the GDP data:
1. Investment activity:
Under the period under review, there has been seen a contraction as was recorded in the previous quarter indication a fall out in investment growth. This is primarily due to NBFC crisis, decline in credit off-take and sluggish sentiment.
What provided a pick up to an extent is a cut in corporate tax rate effected in September last year.
In the previous quarter also gross fixed capital formation, a measure that gives a picture of investment growth declined to just 1% in contrast to 12% recorded in the same quarter of the previous year.
During the period under review, manufacturing growth has decelerated to -0.2% as against 5.2% in th year earlier period.
Manufacturing too an extent has gained some ground with November factory growth being recorded at more than 2%, thus taking the overall factory output for the period under review i.e. October to December out of the negative number.
3. Consumption pattern:
This is decided basis the private final consumption expenditure while it picked up in the previous quarter ending September, there can still be improvement on the front which can thus point to economic revival. In the September ended quarter, consumption expenditure came in at 5.1% better than the previous quarter.
4. Growth in real estate and financial sector:
For the quarter under review, the financial services and real estate sectors reported growth of 7.3% versus 6.5% in the earlier year.
The sector has seen a crisis given the troubled waters in the NBFC space and decline in credit off take. And the sluggish momentum shall continue to be maintained due to muted growth in bank credit.
5. Construction too has taken a hit:
Thre is a hit again on the construction sector with growth at just 0.3% versus 6.6% y-o-y.
The slump in the economy which has slowed down to over 10 years is attributed primarily due to a hit on manufacturing and construction. In the FY20, the growth in construction is estimated to growth at just 3.2% i.e. at its six-year low.
Meanwhile, infrastructure output that includes eight core industries rises for the January month to 2.2% as against previous earlier.
Also, fiscal defiicit for the month has also decreased for January month. Also, there shall be impact due to coronavirus at a later date.
On the impact of coronavirus, RBI governor on the sidelines of an event said that global growth will be impacted. And further he said that he need more data to arrive at more accurate assessment of the COVID 19 impact on Indian economy.