Economy has bottomed out, says FinMin

Our Bureau New Delhi | Updated on February 28, 2020 Published on February 28, 2020

Atanu Chakraborty, Economic Affairs Secretary

Q3 GDP growth pegged at 4.7 per cent; first and second quarter GDP growth sharply revised upwards

Signalling green shoots in the economy, the country’s GDP grew 4.7 per cent in third quarter ended December 31, 2019 on the back of an uptick in agriculture and services besides better show in the eight core industries in December, official data showed on Friday.

The latest quarterly GDP growth print is however lower than 5.6 per cent growth in December quarter last fiscal and the revised 5.1 per cent GDP growth in second quarter of this fiscal.

Simultaneously, the National Statistics Office (NSO) has now revised upwards the first and second quarter GDP growth for the current fiscal to 5.6 per cent (5.1 per cent projected earlier) and 5.1 per cent (from 4.5 per cent) respectively.

“The economy has bottomed out. There is an uptick despite international headwinds,” Atanu Chakraborty, Economic Affairs Secretary said here at North Block.

Asked about the impact of coronavirus on Indian economy, Chakraborty said that it was an “unfolding story”.

He also said that the fourth quarter GDP print — which will be released in end May this year — is expected to be as strong as the third quarter growth number, if not better.

“The PMI in recent months (December, January) are higher, FDI flows are positive and core sector industries are showing growth. Overall the economy is showing an uptick and has bottomed out,” he said.

Meanwhile, a large part of the upward revision in first and second quarter is being attributed to the base effect. The government’s earlier move to scale down 2018-19 GDP growth to 6.1 per cent from 6.8 per cent had led to scaling down of first quarter and second quarter GDP growth for fiscal 2018-19, official sources said.

The second advance estimate of national income for 2019-20 has pegged the 2019-20 GDP growth at 5 per cent. The RBI had in its recent monetary policy statement pegged the GDP growth for 2019-20 at 6 per cent.

Experts’ take

Aditi Nayar, Principal Economist, ICRA, said that GDP and GVA growth of 4.7 per cent and 4.5 per cent, respectively, for Q3 FY2020, are in line with ICRA’s estimates.

“The continued slowdown in economic growth in Q3 FY2020 suggests that the MPC may well undertake another rate cut, but only when the CPI inflation retraces considerably towards the 4 per cent mark. Therefore, we continue to expect a pause, at least in the April 2020 and June 2020 policy reviews,” she said.

Upasna Bhardwaj, Senior Economist, Kotak Mahindra Bank, said : “The softening in economic activity continues despite slight improvement witnessed in the data for the third quarter. The downward revision to FY19 GDP figures, however, have lent favourable statistical support to the 9MFY20 GDP figure at 5.1 per cent implying an expected 4Q GDP at 4.8 per cent to arrive at the government’s full year expected growth of 5 per cent.

“However we remain cautious in the data ahead as the global supply chain disruptions and weakening demand amidst spread of the epidemic could pose downside risk to India’s growth.”

Published on February 28, 2020
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