GDP Q2FY20 HIGHLIGHTS: Economy grows at 4.5% in second quarter; fiscal deficit, core output also paint gloomy picture

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Updated:Nov 29, 2019 6:56:52 pm

The economy grew at 4.5% in the second quarter of the ongoing fiscal, the government data released on Friday showed.

GDP, GDP growth, india gdp chart, india GDP growth, gdp statistics, Pravin SrivastavaMany economists expect India’s GDP growth rate to fall further to below 5 per cent amid consumption slowdown and loss of thousands of jobs.

The economy grew at 4.5% in the second quarter of the ongoing fiscal, the government data released on Friday showed. Many economists had expected GDP growth rate to fall further amid consumption slowdown and loss of thousands of jobs. In the first quarter of the ongoing fiscal, the GDP had fallen to 5 per cent.The fiscal deficit in the first seven months through October stood at Rs 7.2 lakh crore or 102.4% of the budgeted target for the current fiscal year. The October core industrial growth stood at (-)5.8%. In the last quarter, the Gross Value Added (GVA) had fallen too to 4.9 percent as against 6.9 percent in the same period last year. “Economic growth may have slowed but there is no recession, there can be no recession,” said Finance Minister Nirmala Sitharaman said in Rajya Sabha earlier this week. Meanwhile, the market benchmark BSE Sensex tumbled 336 points on Friday as investors turned jittery ahead of GDP data release.

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Highlights

    18:50 (IST)29 Nov 2019
    DEA Secretary says believe there will be an uptick in growth numbers in coming quarters

    DEA Secretary says believe there will be an uptick in growth numbers in coming quarters, expect an uptick in consumption & investment. We have certainly bottomed out.

    18:43 (IST)29 Nov 2019
    Reinforcing confidence of stakeholders in ecosystem will be one of biggest challenges for govt

    "The conundrum of soaring domestic stock market indices in India, slowing growth, rising inflation and elevated unemployment presents a complex challenge for policymakers to address. The slowdown has deepened and is now expected to remain extended than previously anticipated. Optimism levels of businesses and consumers have fallen. The governance deficits in the financial sector cause worry for financial stability. Risk of contagion prevails. Governance issues in one of the co-operative banks and bankruptcy filings by one the largest NBFC companies shows the crisis in the financial sector has not faded away. To address the current issue, the government is expected to take further measures. To set the ball rolling, both the Centre and the state governments should gear up to execute the infrastructure projects in pipeline. This would provide employment opportunities. Further, they should work towards ensuring that auditing norms become more stringent. Reinforcing confidence of stakeholders in the ecosystem will be one of the biggest challenges for the government to tackle; there are no easy fixes," Arun Singh, Lead Economist at Dun and Bradstreet India said.

    18:40 (IST)29 Nov 2019
    Outlook for subsequent rate cuts in 2020 would be dependent on incoming data

    "A sharp growth in Central and state government spending in Q2 FY2020 supported the performance of public administration, defence and other services, which was the fastest growing sub-sector in that quarter. The pace of expansion of the GoI’s non-interest revenue expenditure increased to a considerable 25.1% in Q2 FY2020 from 8.7% in Q1 FY2020. Additionally, for the 24 state governments for which data is available, revenue expenditure growth increased sharply to 16.8% in Q2 FY2020 from the meagre 1.2% in Q1 FY2020. Based on the guidance provided by the MPC regarding the accommodative stance, we anticipate that the Committee would reduce the repo rate by 25 bps in the December 2019 policy review to support economic growth, looking through the vegetable price-led uptick in the CPI inflation in October 2019. However, this decision may not be unanimous. The outlook for subsequent rate cuts in 2020 would be dependent on incoming data, particularly whether growth trends start firming up in Q3 FY2020 and how soon food inflation starts to ebb," Aditi Nayar of ICRA said.

    18:37 (IST)29 Nov 2019
    This and the falling core-CPI should allow the RBI focus more on growth

    "Q2 FY20 real GDP of 4.5% y/y was broadly in line with expectations, but nominal GDP growth was much slower at 6.1% (below 8% in Q1 FY20 and 12% in Q2 FY19). Manufacturing growth contracted, while both private consumption and investment stayed weak. Some support from government spending was expected, given combined central and state expenditure grew 22.5% y/y in Q2 FY20 vs. 1.3% in Q1. Thus, GVA excluding ‘Public Administration, Defence and Other Services’ is much lower at 3.2% (4.5% in Q1), essentially reflecting the high government contribution to the headline number. Given this, and with the just-released index of eight core industries falling 5.8%y/y in October, bottoming-out of growth could be further down the road and recovery is unlikely to be V-shaped as consumer demand, credit supply and risk appetite remain lacklustre. This and the falling core-CPI should allow the RBI focus more on growth, while a major fiscal stimulus is hindered by the lack of available household financial savings," Sreejith Balasubramanian, Economist - Fund Management, IDFC AMC said.

    18:35 (IST)29 Nov 2019
    Measures to stimulate demand needs to be taken immediately

    “Q2 GDP which is at 4.50 % indicates a slump in economic activity and it has become quite pronounced after a slip to 5% in Q1. This leads up to an annual growth rate close to 5%. Stronger fiscal stimulus is required to stem this fall without which it could be still lower as we move into the next financial year. Measures to stimulate demand needs to be taken immediately, in the absence of which counter cyclical actions may not bear fruit," said Joseph Thomas - Head of Research, Emkay Wealth Management.

    18:34 (IST)29 Nov 2019
    RBI may cut repo rate by 25 bps

    As expected Q2FY20  GDP has dropped to 4.5%, which is the lowest level since 6 years compared to 5% in Q1FY20. India’s manufacturing and industrial sectors have been witnessing a slowdown along with fall in consumer demand, private investment and global slowdown. Thus, to revive growth we expect RBI to again cut repo rate by 25 bps on Dec 5 policy”, Rahul Gupta, Head of Research-Currency, Emkay Global Financial Services said.

    18:23 (IST)29 Nov 2019
    Expect GDP to improve from Q3

    Chief Economic Advisor K Subramanian on Friday said that he expected the GDP to improve from Q3FY20.

    18:19 (IST)29 Nov 2019
    Congress on GDP fall

    The Congress on Friday took a swipe at the BJP government over the GDP growth falling to 4.5 per cent, and said this is the lowest GDP recorded in six years.Congress chief spokesperson Randeep Surjewala alleged that for the BJP, the GDP was "Godse Divisive Politics". He was referring to the ongoing row surrounding a BJP MP's remarks on Mahatma Gandhi's assassin Nathuram Godse. "India's GDP has collapsed to an abysmal 4.5%. We are in a virtual free-fallWe are in a virtual free-fall. This is the lowest GDP quarter in 6 years. But why is the BJP celebrating? Because their understanding of GDP (Godse Divisive Politics) suggests double digit growth levels. All in the perspective," he said on Twitter.

    18:18 (IST)29 Nov 2019
    Fundamentals of economy remain strong: CEA

    Chief Economic Advisor says emphasise that economy fundamentals remain strong. We expect GDP growth to pick up from Q3

    18:08 (IST)29 Nov 2019
    China's economic growth was 6 per cent in July-September 2019

    During the six-month period (April-September 2019), the Indian economy grew 4.8 per cent as against 7.5 per cent in the same period a year ago. The Reserve Bank had lowered the GDP growth projection for 2019-20 to 6.1 per cent from earlier forecast of 6.9 per cent. China's economic growth was 6 per cent in July-September 2019, which was the weakest expansion in over 27 years.

    18:00 (IST)29 Nov 2019
    Previous low for GDP

    The previous low for GDP was recorded at 4.3 per cent in the January-March period of 2012-13. The Gross Domestic Product (GDP) growth was registered at 7 per cent in the corresponding quarter of 2018-19.

    17:57 (IST)29 Nov 2019
    Estimates of Expenditures on GDP

    The components of Expenditure on Gross Domestic Product, namely, Consumption Expenditure and Capital Formation are measured at Market Prices.The aggregates are presented in the following paragraphs.

    17:55 (IST)29 Nov 2019
    Gross Fixed Capital Formation

    Gross Fixed Capital Formation (GFCF) at Current Prices is estimated at`13.56lakh crore in Q2 of 2019-20 as against`13.68lakh crore in Q2 of 2018-19. At Constant (2011-2012) Prices, the GFCF is estimated at`10.83lakh crore in Q2 of 2019-20 as against`11.16lakh crore in Q2 of 2018-19. In terms of GDP, the rates of GFCF at Current and Constant (2011-2012) Prices during Q2 of 2019-20 are estimated at27.3percent and30.1percent, respectively, as against the corresponding rates of29.2percent and32.4percent, respectively in Q2 of 2018-19. Growth rates of GFCF at Current and Constant Prices are estimated at (-) 0.9percent and (-) 3.0percent during Q2 of 2019-20 as compared to 16.2percent and 11.8percent during Q2 of 2018-19.

    17:52 (IST)29 Nov 2019
    Private consumption in Q2FY20

    Private Final Consumption Expenditure (PFCE) at Current Prices is estimated at `29.42lakh crore in Q2 of 2019-20 as against`27.28lakh crore in Q2 of 2018-19.  At Constant (2011-12) Prices, the PFCE is estimated at`20.27lakh crore in Q2 of 2019-20 as against`19.30lakh crore in Q2 of 2018-19. In terms of GDP, the rates of PFCE at Current and Constant (2011-2012) Prices during Q2 of 2019-20 are estimated at 59.3percent and56.3percent, respectively, as against the corresponding rates of58.3per cent and56.1per cent respectively in Q2 of 2018-19.Growth rates of PFCE at Current and Constant Prices are estimated at 7.8percent and 5.1 percent during Q2 of 2019-20 as compared to 14.4percent and 9.8percent respectively during Q2 of 2018-19.

    17:52 (IST)29 Nov 2019
    GVA in Q2FY20

    Q2FY20 GVA at 4.3% Vs 4.9% (QoQ) & Vs 6.9% (YoY).

    17:51 (IST)29 Nov 2019
    Price Indices used as Deflators

    The Wholesale Price Index (WPI), in respect of the groups - Food Articlesand All Commodities, has registered a growth of 7.3percentand 0.9percent respectively whereas Mining sector, Manufactured products and Electricity declined by 4.4, 0.1 and 1.2 percent during Q2 of 2019-20over Q2 of 2018-19. The Consumer Price Index (CPI) has shown a rise of 3.5percent duringQ2 of 2019-20as compared to growth of 3.9 percent during Q2 of 2018-19.

    17:50 (IST)29 Nov 2019
    Estimates at Current Prices

    GDP at Current Prices in Q2 of 2019-20 is estimated at `49.64 lakh crore, as against `46.79 lakh crore in Q2 of 2018-19, showing a growth rate of 6.1 percent. GVA at Basic Price at Current Prices in Q2 of 2019-20, is estimated at `45.09 lakh crore, as against `42.42 lakh crore in Q2, 2018-19, showing an increase of6.3 percent.Growth rates in various sectors are as follows: ‘Agriculture, Forestry and Fishing’ (7.4 percent), ‘Mining and Quarrying’ ( -4.4 percent), ‘Manufacturing’ ( -1.1 percent), ‘Electricity, Gas, Water Supply and Other Utility Services’ (2.3 percent), ‘Construction’ (4.2 percent), 'Trade, Hotels, Transport and Communication' (6.1 percent), 'Financial, Real Estate and Professional Services' (6.5 percent), and ‘Public Administration, Defence and Other Services' (17.1 percent).

    17:49 (IST)29 Nov 2019
    Public Administration, Defence and Other Services

    Quarterly GVA at Basic Prices for Q2 2019-20 from this sector grew by 11.6 percent as   compared to growth of 8.6percent in Q2 2018-19. The key indicator of this sector namely, Union Government Revenue Expenditure net of Interest Payments excluding Subsidies, grew by 33.9 percent during Q2 of 2019-20 as compared to 22.2 percent in Q2 of 2018-19.Public Administration,  Defence and Other Services

    17:48 (IST)29 Nov 2019
    Financial, Real Estate and Professional Services

    Quarterly GVA at Basic Prices for Q2 2019-20 from this sector grew by 5.8 percent as compared to growth of 7.0 percent in Q2 2018-19.  Major component of this industry is the Real Estate and Professional Services which has a share of over 75 percent.The key indicators of this sector are the quarterly growth of corporate sector for Real Estate, Business Services and Computer Related Activities which are estimated from available data from listed companies. The other indicators of this sector, viz., Aggregate Bank Deposits, and Bank Credits have shown growth rates of 9.4 percent and8.7percent respectively as on 11th November, 2019.

    17:48 (IST)29 Nov 2019
    Trade, Hotels, Transport, Communication and Services related to Broadcasting

      Quarterly GVA at Basic Prices for Q22019-20 from this sector grew by 4.8 percent as compared to growth of 6.9percent in Q2 2018-19. Key indicator used for estimating GVA from Trade sector is the Sales Tax growth. With introduction of GST, Sales Tax data is now subsumed under GST. Therefore, a comparable estimate of turnover based on Sales Tax has been estimated. Methodology of estimation is as explained in the Annex to the press note on estimates of GDP for the second quarter (July-September) of 2017-18 released on 30thNovember, 2017. Indicator used for measuring GVA from Hotels and Restaurant sector is the Private Corporate growth in this sector. Among the Other Services sectors, Cargo handled at Major Sea Ports, Cargo handled by the Civil Aviation and passengers handled by the Civil Aviation registered growth rates of1.4 percent, (-) 8.7percent and 1.3percent respectively, during July-September, 2019-20. Indicators of Railways sector, namely, Net Tonne Kilometers and Passenger Kilometers have shown growth of (-) 7.0 percent and (-) 2.0 percent respectively, during Q2 of 2019-20.

    17:47 (IST)29 Nov 2019
    Construction

    Quarterly GVA at Basic Prices for Q2 2019-20 from ‘Construction’ sector grew by 3.3 percent as compared to growth of 8.5 percent in Q2 2018-19.  Key indicators of Construction sector, namely, production of Cement and Consumption of finished Steel registered growth rates of 0.3percent and3.3 percent respectively, during Q2 of 2019-20 as compared to 12.5 percent, 9.9 percent respectively, in Q2 of 2018-19.

    17:47 (IST)29 Nov 2019
    Construction

    Quarterly GVA at Basic Prices for Q2 2019-20 from ‘Construction’ sector grew by 3.3 percent as compared to growth of 8.5 percent in Q2 2018-19.  Key indicators of Construction sector, namely, production of Cement and Consumption of finished Steel registered growth rates of 0.3percent and3.3 percent respectively, during Q2 of 2019-20 as compared to 12.5 percent, 9.9 percent respectively, in Q2 of 2018-19.

    17:47 (IST)29 Nov 2019
    Electricity, Gas, Water Supply and Other Utility Services

    Quarterly GVA at Basic Prices for Q22019-20 from ‘Electricity, Gas, Water Supply and Other Utility Services’ sector grew by 3.6percent as compared to growth of 8.7percent in Q22018-19. The key indicator of this sector, namely, IIP of Electricity registered growth rate of0.4percent during Q2 of2019-20 as compared to 7.5percent in Q2 of 2018-19.

    17:46 (IST)29 Nov 2019
    4.5% GDP much below India's potential: Ashima Goyal

    "4.5 per cent is much below India's potential. Macroeconomic stimulus is not much strong enough. We need to do much more. Ashima Goyal to ET Now.

    17:45 (IST)29 Nov 2019
    Manufacturing

    Quarterly GVA at Basic Prices for Q22019-20 from ‘Manufacturing’ sector grew by (-)1.0percent as compared to growth of 6.9percent in Q22018-19. The growth of organized sector (which has a share of more than75 percent in the Manufacturing sector)was estimated from available data of Listed Companies with BSE and NSE.  The Quasi -Corporate and Unorganized segment (which has a share of more than20percent in the Manufacturing sector)has been estimated using IIP of Manufacturing. IIP Manufacturing registered growth rate of(-) 0.4percent during Q2 of2019-20 as compared to 5.6percent during Q2 of 2018-19.

    17:45 (IST)29 Nov 2019
    Mining and Quarrying

    Quarterly GVA at Basic Prices for Q22019-20 from ‘Mining and Quarrying’ sector grew by0.1percent as compared to growth of -2.2percent in Q22018-19.  The key indicators of Mining sector, namely, production of Coal, Crude Oil and Natural Gas and IIP Mining registered growth rates of(-) 10.3percent, (-) 5.1percent,(-) 2.6percent and (-)1.2percent, during Q2 of2019-20 as compared to 6.2percent, (-) 4.4percent, (-) 2.0percent and 0.9percentrespectively, during Q2 of 2018-19.

    17:44 (IST)29 Nov 2019
    Agriculture, Forestry and Fishing

    Quarterly GVA at Basic Prices for Q22019-20 from ‘Agriculture, Forestry and Fishing’ sector grew by 2.1percent as compared to growth of 4.9percent in Q22018-19.The crops including fruits and vegetables account for about 43percent, the livestock products 39 percent and forestry& fisheries 18 percent share of GVA in total GVA of ‘Agriculture, Forestry and Fishing’ sector.

    17:43 (IST)29 Nov 2019
    Estimates at Constant (2011-12) Prices

    GDP at Constant (2011-12) Prices in Q2 of 2019-20 is estimated at 35.99 lakh crore, as against 34.43 lakh crore in Q2 of 2018-19, showing a growth rate of 4.5percent. Quarterly GVA (Basic Price) at Constant (2011-2012) Prices for Q2 of 2019-20 is estimated at `33.16 lakh crore, as against `31.79lakh crore in Q2 of 2018-19, showing a growth rate of 4.3percent over the corresponding quarter of previous year.

    The Economic Activities which registered growth of over 4.3 percent in Q2 of 2019-20 over Q2 of 2018-19 are ‘Trade, Hotels, Transport, Communication and Services related to Broadcasting’ ‘Financial, Real Estate and Professional Services’ and ‘Public Administration, Defence and Other Services’. The growth in the ‘Agriculture, Forestry and Fishing’, ‘Mining and Quarrying’, ‘Manufacturing’, ‘Electricity, Gas, Water Supply & Other Utility Services’ and ‘Construction’ is estimated to be 2.1 percent, 0.1 percent, (-) 1.0 percent, 3.6 percent and 3.3 percent respectively during this period.

    17:39 (IST)29 Nov 2019
    Economy grows at 4.5% in Q2

    India’s GDP growth fell to 4.5 per cent in Q2 FY 2019-20, which is even worse than the six-year low GDP growth rate of 5 per cent in the first quarter of the current fiscal year. The figure is barely in-line with what the street had feared. A Reuters poll had predicted India’s July-September 2019 GDP growth at 4.7%, while a Bloomberg poll had expected it to be 4.5%.

    17:38 (IST)29 Nov 2019
    Slowdown blues get deeper as GDP growth slips further from 6-year low

    India’s GDP growth fell to 4.5 per cent in Q2 FY 2019-20, which is even worse than the six-year low GDP growth rate of 5 per cent in the first quarter of the current fiscal year. Read Full Story

    17:29 (IST)29 Nov 2019
    ICRA on core output data

    " The YoY decline in electricity generation worsened to 12.4% in October 2019 from 2.6% in September 2019, as heavy rainfall reduced demand for power from the agricultural and household sectors, and demand from the manufacturing sector was limited given the holidays during the festive period. With healthy reservoir levels, hydroelectricity generation would remain robust in FY2020. This, in conjunction with an increasing share of other renewable generation sources (mainly wind and solar), would thereby squeeze thermal electricity generation in the next few quarters. Rainfall related bottlenecks to construction activities contributed to the YoY decline in output of cement and steel in October 2019. Focus on expediting infrastructure projects, measures to aid real estate developers and proposals to address the stress in the NBFC sector may support a pickup in construction activities in the coming months. This should support an improvement in growth of core items such as steel and cement in the remainder of FY2020," ICRA's Aditi Nayar said.

    17:27 (IST)29 Nov 2019
    FM's remarks on economy disappointing in extreme: Sinha

    Former Union minister Yashwant Sinha on Friday termed Finance Minister Nirmala Sitharaman's remarks on the state of economy as "disappointing in the extreme" and said the main cause of the current crisis is "death of demand". He said that even now, the government is largely in denial and one cannot solve a problem if "you are in denial of its existence". Replying to a short-duration discussion on the state of the economy in the Rajya Sabha on Wednesday, Sitharaman has launched a spirited defence of her handling of the economy, comparing macroeconomic indicators with past Congress rules and said the growth may have slowed down but the economy will never slip into recession. "We have heard what the finance minister said in the Rajya Sabha...and it was disappointing in the extreme," he said here at the National Economy Conclave. Sinha said the root cause of the current economic crisis is "death of demand" in the country.

    17:25 (IST)29 Nov 2019
    Past performance of eight core sector data

    The eight core sectors had expanded by 4.8 per cent in October 2018. During the April-October period, the growth of core industries fell to 0.2 per cent against 5.4 per cent in the year-ago period.  Output of eight core infrastructure industries had contracted by 5.1 per cent in September, the lowest in the decade.

    17:24 (IST)29 Nov 2019
    Core sector output shrinks 5.8% in Oct

    Output of eight core infrastructure industries contracted by 5.8 per cent in October, indicating the severity of economic slowdown, according to the government data released on Friday. As many as six of eight core industries saw a contraction in output in October.  Coal production fell steeply by 17.6 per cent, crude oil by 5.1 per cent, and natural gas by 5.7 per cent.  Production of cement (- 7.7 per cent), steel (- 1.6 per cent), and electricity (- 12.4 per cent) also declined during the month. The only sector that posted growth in October was fertilizers where production increased by 11.8 per cent year-on-year.Growth in output of refinery products slowed down to 0.4 per cent in October as against 1.3 per cent in the same period last year. The eight core sectors had expanded by 4.8 per cent in October 2018.

    17:23 (IST)29 Nov 2019
    Eight core industries growth rate

    Eight core industries growth at -5.8% Vs -5.2% (MoM). April-October growth at 0.2% Vs 5.4% (YoY).

    17:21 (IST)29 Nov 2019
    ICRA on latest fiscal deficit data

    "It remains unclear whether the targeted disinvestment in all identified entities would be completed during FY2020, and whether the GoI would meet its disinvestment target for this fiscal. Given the likely sizeable shortfall in tax collections and lack of clarity on the additional revenues that would be received from the telecom sector, expenditure cuts may need to be undertaken to prevent the fiscal deficit from rising too sharply in FY2020, in our view. Both revenue and capital spending recorded a growth of around 14% in April-October 2019. Approximately three-fourths of the budgetary allocation for major subsidies appears to have been released in April-October 2019, suggesting that some amount may spillover and need to be carried forward into the next fiscal year," ICRA's Aditi Nayar said.

    17:19 (IST)29 Nov 2019
    Core sector output shrinks 5.8% in October

    Core sector output shrinks 5.8% in October, the latest government data showed.

    17:15 (IST)29 Nov 2019
    India's April-October fiscal deficit exceeds full-year target

    India's fiscal deficit in the first seven months through October stood at 7.2 trillion rupees ($100.32 billion), or 102.4% of the budgeted target for the current fiscal year, government data showed on Friday. Net tax receipts in the April-October period was 6.83 trillion rupees, while total expenditure was 16.55 trillion rupees, the data showed.

    17:07 (IST)29 Nov 2019
    FM's remarks on economy disappointing in extreme, says Sinha

    Former Union minister Yashwant Sinha on Friday termed Finance Minister Nirmala Sitharaman's remarks on the state of economy as "disappointing in the extreme" and said the main cause of the current crisis is "death of demand".

    17:03 (IST)29 Nov 2019
    RBI's GDP expectations

    In its latest bi-monthly monetary policy statement in October, the Reserve Bank of India cut its growth projection for the domestic economy by a sharp 80 bps to 6.1%, citing ‘generally weaker high-frequency indicators for the second quarter’.

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