The GDP for the second quarter (July-Sept 2020) reflect a contraction of -7.5% as opposed to -23.5% in the last quarter. Have we done better than expected or has India Inc not done as great as expected?
D K Joshi, Chief Economist, CRISIL. says that the Q2 GDP numbers are a significantly positive surprise. This will trigger upward revisions in the yearly GDP forecasts from people who were too pessimistic. In the initial parts of November, sales of automobiles had picked up but there was a slight flattening of the curve. We have to see if the recovery will be sustained once the pent up demand dies down. A big part of the recovery has come from manufacturing activities since the lockdowns and social distancing restricts people from spending on service oriented industries.
He also says that manufacturing sector was expected to do better than the numbers we are seeing now but even then, the numbers are great. the current numbers are value added which includes cost cutting measures taken by manufacturing companies, and therefore, the bottomline has been doing better than the topline. Agriculture was insulated from Covid-19 impact, sowing and monsoon have been good, and therefore, agriculture will show better than predicted growth this year.
Watch BOOM's Govindraj Ethiraj interview D K Joshi on India's Q2 GDP numbers and how the technical recession will affect us.