Online search for the term ‘GDP’ spike like never before

Businesses do not have an appetite or a repayment capability to take new loans. At the same time, they are saving money instead of taking any business risks by expanding.

Published: 22nd June 2020 10:48 AM  |   Last Updated: 22nd June 2020 10:48 AM   |  A+A-


For representational purposes (File photo)

Express News Service

When the Indian government announced an economic package to fight the Covid-19 pandemic in May 2020, the nation-wide online search for the term ‘GDP’ witnessed a spike like never before, according to Google Trends.

Each day, a lot of economic data keeps getting pushed out. If you are not into tracking financial markets daily, you could be overwhelmed. Searching for the term ‘GDP’ is perhaps the first step.

Where to begin?

Gross Domestic Product or GDP is the aggregate value of goods and services that are produced in a country. It is a fundamental macro-economic data. Every quarter, the government announces the data. For the quarter ended March 2020, India’s GDP growth was 3.1 per cent, and for the full year ended March 2020, it was pegged at 4.2 per cent. The annual growth rate was the slowest in 11 years.

A beautiful assortment of economic assessment is available in the Reserve Bank of India (RBI) releases. When the RBI’s monetary policy committee announces the credit policy stance, it releases a bunch of documents.

The RBI’s Policy Statement issued is an important document. The minutes of the credit policy committee meeting is an even better one. RBI releases them within a couple weeks of the meeting. Members of the RBI MPC are an authority in economics in their own right.

There are a reasonably large number of macro-economic indicators used to track the economy. Inside this document, you get an essential update on the ongoing economic situation. It also makes sense of that information released through the year. You may want to read it regularly—every two months—to get up to speed with the economic developments.

What do these minutes say?

Minutes of the monetary policy committee meetings held in the last week of May 2020 highlight that India’s macro-economic indicators are deteriorating rapidly. Slow growth, falling non-food credit, collapse in demand resulted in members voting a 0.40 per cent or 40 basis points cut in the repo rate—the rate at which RBI lends money to lending institutions or banks.

The idea of having low borrowing rates in the banking system is to stimulate economic growth. For that purpose, banks have to lend more money to businesses. The committee observed that the credit growth in India had decelerated to multi-year lows on account of dented demand and heightened risk aversion. Businesses do not have an appetite or a repayment capability to take new loans. At the same time, they are saving money instead of taking any business risks by expanding.

India’s merchandise trade slumped in April 2020, with exports shrinking by 60.3 per cent and imports by 58.6 per cent over the year-ago period, respectively. That is another indicator of a slump in demand for goods and services. The committee members observed that the macroeconomic impact of the pandemic is turning out to be more severe than initially anticipated. Various sectors of the economy are experiencing acute stress, according to the panel.

The committee also observed that beyond the destruction of economic and financial activity, livelihood and health was severely affected. The panel justifies a low-interest rate regime to boost economic activity in the country. A more significant point of concern is that the RBI MPC committee did not make any forecast for the outlook of growth and consumer price or retail inflation.

However, there are some green shoots. Credit rating agencies assign a rating to a country based on the debt repayment prospects. While the commentary was negative from credit-rating firm Moody’s, there was no changes in ratings.

Fitch, another rating agency, downgraded India’s outlook to negative from stable. They expect a bounce back once the economic activity opens up.

The RBI MPC committee has also highlighted India’s agriculture sector. It is expected to do well as the Indian Meteorological Department has predicted a normal monsoon. Businesses rely on a predictable trend for a country’s economic growth. Most of them depend on that for their business to grow. From a financial markets standpoint, the profitability of companies going forward is fraught with uncertainty. Analysts are putting out profit estimates that are getting revised downwards. Yet, central banks in the US and Europe are pumping more dollars and euros into financial markets. That is fuelling a rally in global markets. (The author is editor-in-chief at

GDP growth falling

4.2 per cent is the GDP growth for the previous financial year 2019-20 by the Government of India

RBI rate cuts gather pace

0.40% was the quantum of the RBI’s most recent repo rate cut, with slow growth, falling non-food credit, and a collapse in demand spurring it to act


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