FY 2020 GDP growth at 4.2%

PROFIT MAKER May 29, 2020

FY20 GDP growth at 4.2%, lowest in the current series!!

FY-2020-GDP-growth-at-4.2

India reported a better than expected growth of 4.2% in FY20. GDP rose by 3.1% in Q4FY20 vs 4.7% in Q3FY20.

The GDP data released by the Government on Friday showed that Indian economy slowed down by 3.1% in the January to March quarter, partly due to the nationwide lockdown imposed by Narendra Modi government. 
  • Q1 now stands a at 5.2% revised downward from 5.6
  • Q2 4.4 % now, revised downward from earlier 5.1%
  • Q3 revised downward to 4.1% now, from earlier 4.7%

Core sector output contracts by record 38.1% in April

Core-sector-output

    • India’s core sector output contracted 38.1% in April
    • This marks the worst performance by the key infrastructure areas going back to 2005
    • This is the second consecutive contraction in the key economic indicator
The core industries comprise more than 40 percent of the weights included in the calculation of IIP. 
Asia’s third-largest economy began slowing last year, but a nationwide lockdown imposed on Mar 24 which caused severe damage to livelihood and economic activities and Q1 GDP for FY 2021 will likely be between 7.8 - 8.5% (as per Souvik Dey) 
Economists estimated that the fiscal year that began in April will see the worst economic contraction in at least four to five decades. However, weather forecasts for normal monsoon rains are in farmers' favour at least, giving a sign of hope that the rural sector can help support the millions of migrant workers who returned to their villages from cities when the lockdown began.
Earlier this month, the Reserve Bank of India (RBI) cut policy rates by 40 basis points (bps), and has reduced its key repo rate -- rate at which the RBI lends money to banks -- by 115 bps since February.
"In view of nationwide lockdown during April 2020 due to COVID-19 pandemic, various industries - Coal, Cement, Steel, Natural Gas, Refinery, Crude Oil etc experienced substantial loss of production," the ministry said in a statement.
However, RBI is very well positioned in terms of foreign exchange reserves and it has enough surplus capital to provide liquidity windows for the Indian BFSI sector.
The demand slump and supply disruptions will hurt economic growth for the first two quarters. However WODS believes that growth impulses and liquidity boosters by the RBI will improve investor sentiments and growth will be normalized after H1 of FY 2021.
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