India’s National Statistics Office has released first advance estimates of national income for FY2020. The estimates are based on benchmark-indicator method with data up to seven to eight months. GVA growth at basic prices is expected to grow at 4.9%, much lower than 6.6% in FY2019 and an average of 7.3% in the last five years. GDP at market prices (GVA plus net taxes on products including import duties) is expected to grow at 5%. It is much lower than 7% target set by the government. Eventually, when the actual estimate for FY2020 is released after a year or so, even 5% advance estimate may look a bit optimistic.
The provision GDP growth estimate for FY2019 is 6.8% and the average in the last five years was 7.5%. The sharp downward revision of annual estimate is in line with the slowdown seen in the quarterly estimates (up to Q2 FY2020) released last month. FY2020 GDP growth estimate of 5% is the lowest since FY2009, when it grew by 3.1%. Here is the IMF's latest Article IV assessment.
The provision GDP growth estimate for FY2019 is 6.8% and the average in the last five years was 7.5%. The sharp downward revision of annual estimate is in line with the slowdown seen in the quarterly estimates (up to Q2 FY2020) released last month. FY2020 GDP growth estimate of 5% is the lowest since FY2009, when it grew by 3.1%. Here is the IMF's latest Article IV assessment.
It looks like a broad-based slowdown. Almost all sectors are expected to slowdown in FY2020. Agricultural output is estimated to grow at 2.8%, which marks three consecutive years of slowdown. Industrial output is also expected to slowdown further to 2.5%. It marks four consecutive years of deceleration of industrial output. Similarly, services output is expected to growth at 6.9%, which marks five consecutive years of deceleration of services output.
Within industrial sector, mining & quarrying output is expected to grow at 1.5%, marginally higher than 1.2% in the previous year. However, manufacturing output growth is expected to slump to 2%, much lower than 6.9% in the previous year. Electricity, gas and water supply activities are expected to growth by 5.4%. Construction activities are expected to grow at 3.2%, much lower than 8.7% in the previous years. It reflects the slowdown in private consumption as well as investment, especially on capital and core industrial goods.
Services output is expected to grow at 6.9%, the lowest growth rate since FY2009. Within services sector, trading, hotels & restaurants, transportation and communication activities are expected continue decelerating. Similarly, financial, real estate and professional activities are also expected to grow at a slower pace than in the previous year. But then public administration, defense and other services are expected to grow at 9.1%, higher than 8.6% in the previous year.
On the expenditure side, while both consumption and investment are expected to decelerate net exports are expected to recover. Government consumption is expected to grow at a rate slightly higher than in the previous year, reflecting the front-loading of government spending in the first two quarters of FY2020. However, private consumption is expected to grow at 5.8% only, the lowest since FY2013. Gross capital formation (generally investment) is expected to grow at 1.5%, much lower than 4.3% in FY2019 and 12.9% in FY2018. Within GCF, fix capital investment is expected to nosedive. GFCF is expected to grow at 1% only, a sharp dive from 10% growth in the previous year. Similarly, change in stocks is also expected to slowdown. Meanwhile, a larger slowdown in imports compared to slowdown in exports meant that net export growth is positive.
Nominal GDP growth is estimated to be 7.5%, much lower than 12% target set in the FY2020 budget speech.
