India GDP annual growth rate has shown a spunk of 7.5% in performance between July to September 2020. The growth at Q2’2020 was 4.4%. Last quarter the GDP crashed out to 23.9%, which break out a 41 years record.
In our previous article on GDP, we had highlighted a key point that “If our country still be in negative growth for the next quarter, we will be in recession”
Yes, we are technically in recession. But, the positive note to be taken here is,
- The GDP growth has not been worst as expected by an expert of -8.8%. The earlier forecast was at -18% while the Q1’2021 results announced.
- Experts and Investors see this as a V-shaped recovery as similar happened in the stock market post-COVID-19 crash.
- The manufacturing sector has back on track as its PMI index also has seen huge growth. This indicates the generation of demand in the market.
- In the previous quarter result, India had performed the least in terms of growth compared to G7 countries. The pandora has changed in this quarter, as it has shown reliable extent in growth compared to many countries.
The actual GDP of Q2’2021 was 35.84 Lakh Crores compared to the Estimated 33.14 Lakhs Crores
Still, there are few conspiracies which we should always keep in our mind as an investor,
- The data which was released by the Union Ministry of Statistics and Programme Implementation (MoSPI) has only information about the top industries
- The macro and microeconomics were not covered, where the impact of COVID is higher.
- Expect Agriculture, Electricity and Manufacturing Industries, others are yet to recover a lot.
Still, it is a good sign as an investor, as India has shown betterment in consideration with other Asian countries and globally.
Let us focus the report in detail with historical pictorial understanding.
INDIA GDP ANNUAL GROWTH RATE – HISTORICAL DATA:
The above image is a clear historical representation of Indian GDP for the last 3 years. The key points for consideration are,
- The annual growth rate hasn’t declined during COVID lockdowns. For a span of the existing 6 quarters, it is shrinking from the base values consistently.
- Experts point out at Q2’2021 results a surprising or exceeded the expectation. It would be great if we would be positive. Still, it is not a bad one like the previous quarter.
- The set benchmark of 8.1% annual growth rate on Q4’2019. This will literally speak on the country’s economical growth.
- This is not termed to be V-shape recovery, still, the image represents a V. As, the country came out of lockdown, combined with festivals the demand hiked up. Hard to digest, there is a lot of development that should be backed up for the strong recovery of 8.1% as the annual growth rate
Kindly have a look at our article on Indicators of the stock market crash.
INDUSTRY WISE INSIGHTS ON GDP GROWTH RESULT:
- Commendable recovery has seen in the Manufacturing Industry. It has landed at 0.6% compared to -39.3% during Q1’2021. This is especially due to the relaxation in lockdown and resuming of the economic condition of the country. As people resumed back, the demand has shooted up.
- Utility Industry like electricity, natural gas has shown an awesome recovery and accounts for 4.4% growth compared to -7% in Q1’2021.
- The consistent and sharp performance was established by Agriculture of 3.4%. The growth rate was the same as the previous quarter. This was the only industry with a positive growth rate during Q1’2021,
- In terms of Private Investments, there was a good recovery of almost -7.3% compared to -47.1% of the previous quarter.
- Bleeding at Export Industries is arrested to some extent as it has conquered a growth of -1.5%, it was at -19.8% the previous quarter.
- In the case of the Import Industry still, a huge impact in terms of growth is required. The industry has marked the growth of -17.2% vs -40.4%
- The mining industry has shown an average recovery from -23.3% of last quarter to -9.1% currently.
- A betterment was seen in the Construction industry with a growth rate of -8.6% compared to -50.3% of the previous quarter. As the lockdown relaxation leads to the continuation of all projects which were stopped due to COVID.
- The worst part was seen in finance, real estate, and personal service industries, which still degrown on the higher rate of -8.1% compared to -5.3% of the previous quarter.
OTHER ECONOMIC FACTORS:
- The GDP growth still contracted in October to -2.5%, which was -0.8% in September. This has been a wrong signature on the expected GDP growth of Q3’2021 to be positive.
- The Income Tax collection has exceeded more than Fiscal 2019 in September 2020.
- GST collection has crossed 1.05 lakh crore in the month of October
- The CARE rating agency has projected India GDP growth for FY 2020-21 will be landing around -7.7% to -7.9%. The complete recovery of the growth will be reflected from H1’2021-22.
- As a result of the technical recession, the inflation rate is peaking up to 7.61. Where savings account provide only 2.5-3% as interest rate per annum. This will lead to stagflation if the repo rate is not going to boost up.
- The unemployment rate of the country has shot up again to 7% from 6.7%.
- Amidst these conditions, the share market is at its peak of touch new height on the NIFTY 50 Index at 13000+