INSUBCONTINENT EXCLUSIVE:
MUMBAI: India's GDP growth slipped to a nearly 7-year low of 4.7 per cent in October-December 2019, weighed by a contraction in
manufacturing sector output, PTI reported.
While the slump may have reached its bottom, the downside risks to the global growth as a result
of the coronavirus outbreak is still unfolding.
India’s GDP growth for full FY19 had stood at 6.8 per cent.
Here’s how economists and
Dalal Street experts reacted to the GDP data:
Abheek Barua, Chief Economist, HDFC BankThe 4.7% growth is in line with economists'
However, with a likely impact of the coronavirus beginning to play out in the last quarter and expenditure compression by the government,
last quarter GDP growth could disappoint
This could mean that GDP for the year could be lower than 5%
The coronavirus remains the critical risk as India depends on China for both demand and supply of inputs
The case for an early rate cut despite adverse inflation optics remains and globally central banks might have to go in for aggressive
monetary easing to offset a pandemic led recession.
Sreejith Balasubramanian, Economist - Fund Management, IDFC AMCInventory restocking and
base effects could make some of the numbers appear better, but we believe a meaningful recovery could be further away as both demand and
credit supply continue to remain weak
India’s growth could be impacted by coronavirus depending on the duration and intensity of both its spread and containment measures across
While India’s direct trade linkage to China and Hong Kong is at 9 per cent of total exports and 17 per cent of total imports, supply chain
disruptions and lower external demand would add to domestic issues and continued risk-off capital outflows could put pressure on EM
currencies, although the RBI has been shoring up FX reserves
However, expectations of global monetary policy easing has already started rising amidst the uncertainty which still looms large.
Madhavi
Arora, Lead Economist, Fx And Rates, Edelweiss SecuritiesWith Asia growth being suppressed in 4QFY20 amid COVID-19 impact, external demand
spillover to India amid supply disruptions would weigh marginally on India's near-term growth
It appears growth slowdown is not just cyclical but more entrenched with consumption secularly joining the slowdown bandwagon even as
investment story continues to languish
Factors including still-tight financial conditions, weakening household and corporate balance sheet, sluggish private capex and lack of
business confidence, possible slower public capex amid fiscal constraints continue to weigh and require continued innovative policy levers
both from India's government and the RBI.
Rupa Rege Nitsure, Chief Economist, L-T Financial HoldingsThe only silver lining in the overall
picture of gloom and doom is the steadily improving growth of agriculture and allied activities
This sector, besides the government spending on public administration, has prevented the growth from sliding further
The revisions in previous quarter numbers do happen routinely with better availability of data
I don't think that should materially change anything
Manufacturing has been falling consistently as per the IIP data and the real weak spots are manufacturing, especially capital goods,
construction, trade and financial services."
Madan Sabnavis, Chief Economist, Care RatingsThe Central Statistics Office has not considered
the coronavirus in their estimates, which can impart a downward bias to the GDP growth projection of 5% for the year, as Q4 has to register
a very high growth rate of 5.5%+ given the three quarterly numbers of 5, 4.5 and 4.7%
The numbers are otherwise on expected lines with disappointing growth in manufacturing and the push coming from services, especially the
Investment still is down and unlikely to recover in Q4
Radhika Rao, Economist, DBS BankQ3FY20 GDP was largely in line with consensus, with
notable revisions to 1Q and 2Q data
Strength in private consumption surprised on the upside, but the drag from investments persist as capacity utilisation remains sub-par
With global risks on the rise and a challenging trade/ manufacturing outlook in 4QFY owing to the COVID-19 developments, production might
face some headwinds in 4QFY
Hopes are high that as China gradually returns to work, supply disruptions will abate and production will play catch-up to normalise prices
and supplies in 1QFY21.
Sujan Hajra, Chief Economist, Anand Rathi SecuritiesWhile the GDP growth is slightly better quarter over quarter,
after the revision it is a drop again
But the situation seems to be improving
Private consumption has improved
Investment degrowth remains an area of concern
While monetary policy will be supportive of growth, given the higher retail inflation in January it will be difficult for the RBI to act in
the near-term."
Shashank Mendiratta, Economist, IBMThe slowdown was led by contraction in investment for the second straight quarter
Private consumption growth also eased slightly after a recovery during Q2FY20
However, government spending remained the mainstay, growing in double digit for another quarter
Looking ahead, high frequency indicators continue to show a mixed outcome suggesting that the growth recovery may be shallow
Even as India is relatively less exposed to economic implications from the coronavirus in China, the disruptions need to be monitored in
sectors which are dependent on inputs from China
Nonetheless, India's exposure is limited due to lack of participation in supply chain.
Devarsh Vakil- Head, Advisory (PCG), HDFC
SecuritiesThe data suggests the slowdown has bottomed out and measures taken by the government in the recent budget to improve capacity to
spend in rural sector, infrastructure creation and inviting foreign investments will boost growth going ahead
Latest policy tools brought in by RBI (LTRO) and postponement of Gilt maturities through operation twist have added significant monetary
stimulus to the financial system
The fast-spreading coronavirus outbreak will shave some points from global growth, though we expect a coordinated response from central
bankers to unleash liquidity to counter the effects of slowdown
It should also add tailwinds to the growth recovery whenever the virus spread is contained.
Karan Mehrishi, Lead Economist, Acuité Ratings
- ResearchQ3 print is in line with our expectations
Even though a favourable base did play a role in the slight improvement in quarterly value added, it is heartening to see green shoots in
household consumption and capital formation
Nevertheless, a tight fiscal space is constricting public expenditure, which has reported a lower contribution of GDP this quarter
Industry wise, agro and allied, public administration and mining have shown encouraging performance in Q3 along with financial services
On the other hand, manufacturing and electricity and to an extent construction related sectors continue to exhibit contractionary
tendencies.
Rahul Bajoria, Chief India Economist, BarclaysThe upward revisions in historical data present a complicated picture of growth,
even though high frequency data is improving
We reckon a modest recovery continues to stay intact, and will gather some more steam in coming months despite mounting global risks.
