India's GDP growth at 4.7% in Dec quarter, marginal improvement over Q2

FY20 growth projections retained at 5% in the second advance estimates. The official Q3 GDP data showed that the impact of a global slowdown and weak manufacturing continued to weigh on the economy

India’s gross domestic product (GDP) growth in the October-December quarter of 2019 (Q3 of FY20) stood at 4.7 per cent, showed official data released by the Central Statistics Office (CSO) on Friday. The data also showed that projections for economic growth in full FY20 had been retained at 5 per cent in the second advance estimates.

The rate of the country’s economic growth had stood at a six-year-low of 4.5 per cent in the previous quarter (Q2) and 6.6 per cent in the same quarter a year earlier (Q3 of FY19). India’s GDP growth in full FY19 had stood at 6.8 per cent.

The GDP growth rate for the first quarter of 2019-20 was revised to 5.6 per cent, and for the second quarter to 5.1 per cent. During the first nine months of this financial year (April-December 2019), the Indian economy grew 5.1 per cent, against 6.3 per cent in the same period of FY19.

Another set of important data released on Friday showed that the country's fiscal deficit in the first 10 months of FY20 (April 2019-January 2020), at Rs 9.85 trillion, stood at 128.5 per cent of the government's revised full-year target of Rs 7.66 trillion.

The low rate of expansion in the economy seen in the December quarter was mostly an extension of the weak manufacturing, falling exports and weak consumer demand and private investment witnessed in the previous quarter against the backdrop of a global slowdown.
 
Gross value added (GVA) growth during the third quarter stood at 4.5 per cent, against 4.3 per cent in July-September quarter this year and 6.3 per cent in the December quarter of FY19.

 
The numbers released today were broadly in line with expectations. Most experts had pegged growth in Q3 of FY20 at close to 5 per cent, despite the slew of measures announced by the government in the past few months to help revive economic growth.
 
A Reuters poll had on Thursday suggested that India's economy might have fared slightly better in Q3 than the previous quarter. But it had warned that there could be further drop in the final quarter of the financial year due to the impact of the Coronavirus outbreak globally.
 
The median forecast of the Reuters poll of economists on India’s annual economic growth was 4.7 per cent in the December quarter, marginally higher than the 4.5 per cent in the previous quarter, thanks to a small rebound in rural demand, private consumption and government spending.
 

The central bank has warned that downside risks to global growth have increased as a result of the coronavirus epidemic, the full effects of which are still unfolding. "So far as the impact (of coronavirus) on India is concerned we will take some more time to arrive at more accurate conclusions, but coronavirus is definitely going to pull down global growth," Shaktikanta Das, governor of the Reserve Bank of India (RBI), said in Mumbai on Friday.

Many economists said that the government stimulus could take four to six quarters before lifting the economy and the impact of those efforts could be outweighed by the global fallout from the coronavirus epidemic that began in China. "The coronavirus remains the critical risk as India depends on China for both demand and supply of inputs," Abheek Barua, chief economist at HDFC Bank told Reuters. 
 

Stocks sank on Friday for a sixth session running, capping their worst week in more than a decade. The NSE Nifty 50 index shed 7.3% over the week, while the Sensex dropped 6.8%, the worst weekly declines since the 2008-09 financial crisis. Separately, India's infrastructure output rose 2.2% year on year in January, data showed on Friday. A spike in inflation to a more than 5-1/2 year high of 7.59% in January is expected to make the RBI hold off from further cuts to interest rates for now, while keeping its monetary stance accommodative.