India's economy grew at 4.7 per cent during the third quarter of FY20, slower than the second quarter, implying that growth is not the full shilling yet.
The Central Statistics Office (CSO) revised Q2 growth to 5.1 per cent from 4.5 projected earlier.
The elephant in the FY20 statistics will be the current quarter's growth as Q3 saw a relatively improved demand led by festive sales (modest going by past consumption trends though). Government spending -- the sole driving force during the first two quarters -- contracted in Q3 and going by the budget numbers, it will see further compression in Q4. Minus the pick up in demand and lower government spending, Q4 numbers will be keenly watched.
Private consumption growth picked up during the third quarter, but private investment or gross fixed capital formation fell over the previous quarter. Given that bank credit offtake remained lacklustre at about 6.8 per cent as on February 14, it appears that investments too are unlikely to lift the sagging economy in Q4.
The CSO's second advance estimates also retained full fiscal FY20 growth at 5 per cent as against FY19 growth of 6.1 per cent revised last month from the original projection of 6.8 per cent. But what we need is a faster economic heartbeat topping 8 per cent and above to create jobs and meet the $5 trillion target. Nominal growth (adjusting for inflation) is pegged at 7.7 per cent for Q3 and 7.5 per cent for FY20.
And though the government maintained the slowdown has bottomed out, economic recovery has a fresh ancillary concern in the form of the coronavirus, which is threatening to disrupt global supply chains, trade and world economy. As per SBI Research, more than half of India's imports in 19 categories come from China.
Among the eight broad indicators used in measuring GDP, at least four saw a wholesale collapse. Notably, manufacturing, which entered negative territory in Q2 contracted further in Q3, followed by electricity, construction and trade and services.
In all, real GDP in the December quarter stood at Rs 36.65 lakh crore as against Rs 35 lakh crore last year. Similarly, for FY20, GDP is pegged at Rs 146.84 lakh crore compared to Rs 139.81 lakh crore in FY19.
Meanwhile, separate data released Friday showed India's core eight sectors growing at 2.2 per cent in January over last year. The core sectors include coal, crude oil and electricity, and account for about 40 per cent of the country's industrial output.
Similarly, the country's fiscal deficit in the first 10 months of FY20 (April 2019-January 2020) stood at Rs 9.85 lakh crore or 128.5 per cent of the government's revised full-year target of Rs 7.66 lakh crore.