Experts on GDP numbers: 'Worst is not past us'

The Q2 GDP growth fell to its lowest in 6 years, eliciting sharp reactions from the Opposition and experts. What is more worrying is the fact that some experts said the worst may not be past us.

New Delhi: Despite a slew of government measures aimed at reviving growth, the Indian economy continued its downward trajectory. The Q2 GDP growth fell to its lowest in 6 years, eliciting sharp reactions from the Opposition and experts. What is more worrying is the fact that some experts said the worst may not be past us.

Former Finance Secretary Subhash Chandra Garg said it not very surprising it was likely to be the case. He also said in a tweet the goal of USD 5 trillion economy seems to be slipping away by at least one year.

• GDP Q2 growth slipped below 5% at 4.5%. H1 growth only at 4.6%. Nominal Q2 growth has fallen to 6.1%. Fixed capital formation growth at .9%! GDP 2019-20 may not exceed 5% in real and 8% in real terms. Goal of $5 trillion economy seems to be slipping by at least one year.

  — Subhash Chandra Garg (@Subhashgarg1960) November 29, 2019 " class="align-text-top noRightClick twitterSection" data="

  GDP Q2 growth slipped below 5% at 4.5%. H1 growth only at 4.6%. Nominal Q2 growth has fallen to 6.1%. Fixed capital formation growth at .9%! GDP 2019-20 may not exceed 5% in real and 8% in real terms. Goal of $5 trillion economy seems to be slipping by at least one year.

  — Subhash Chandra Garg (@Subhashgarg1960) November 29, 2019

  ">

  GDP Q2 growth slipped below 5% at 4.5%. H1 growth only at 4.6%. Nominal Q2 growth has fallen to 6.1%. Fixed capital formation growth at .9%! GDP 2019-20 may not exceed 5% in real and 8% in real terms. Goal of $5 trillion economy seems to be slipping by at least one year.

  — Subhash Chandra Garg (@Subhashgarg1960) November 29, 2019

Congress leader Kapil Saibal said, “Well, at the moment the July-September quarter shows a growth rate of 4.05%. In the previous quarter it was 5%. So, you see the economy going down."

Senior Congress leader P Chidambaram said the lower GDP growth rate of 4.5 per cent was as predicted but warned that third quarter will be worse.

"As predicted widely, GDP growth in Q2 has come lower at 4.5%. Yet the Government says 'All is well'. Q3 will not be more than 4.5% and in all likelihood will be worse," Chidambaram said in a tweet posted by his family on his behalf.

• I have asked my family to tweet the following:
  
  As predicted widely, GDP growth in Q2 has come lower at 4.5%. Yet the Government says "All is well".
  
  Q3 will not be more than 4.5% and in all likelihood will be worse.

  — P. Chidambaram (@PChidambaram_IN) November 30, 2019 " class="align-text-top noRightClick twitterSection" data="

  I have asked my family to tweet the following:
  
  As predicted widely, GDP growth in Q2 has come lower at 4.5%. Yet the Government says "All is well".
  
  Q3 will not be more than 4.5% and in all likelihood will be worse.

  — P. Chidambaram (@PChidambaram_IN) November 30, 2019

  ">

  I have asked my family to tweet the following:
  
  As predicted widely, GDP growth in Q2 has come lower at 4.5%. Yet the Government says "All is well".
  
  Q3 will not be more than 4.5% and in all likelihood will be worse.

  — P. Chidambaram (@PChidambaram_IN) November 30, 2019

Talking to IANS, former Chief Statistician of India, Pronab Sen said the manufacturing showing negative growth is certainly worrying. "I don't think the growth has bottomed out, the growth figures may continue to decline the next quarter too, however, post fourth quarter may show some recovery owing to the base effect," Sen said.

On the divergence seen in the stocks markets, currently around record levels, Sen said: "It is essentially in reaction to the corporate tax cut".

Prof. R. Nagraj of Indira Gandhi Institute of Development Research (IGIDR), Mumbai, said: "I don't see any green shoots in the economy as of now."

However, N.R. Bhanumurthy, Professor at the National Institute of Public Finance and Policy believes that the GDP growth has bottomed out and we may see revival ahead.

"Such low growth figures were not expected. Led by the service sector, we can see a revival in the next quarter".

Deepthi Mary Mathew, economist at Geojit Financial Services, also said that the GDP growth rate for Q2FY20 was in line with the market expectation at 4.5 per cent. All the indicators ranging from IIP, electricity consumption to core inflation rate were pointing towards the fact that the economy has not entered the revival path.

Sreejith Balasubramanian, Economist-Fund Management, IDFC AMC, noted that "bottoming out could be further down the road and recovery is unlikely to be V-shaped as consumer demand, credit supply and risk appetite remain lacklustre".