INDIAN GDP ANNUAL GROWTH RATE SLIPPED BY 23.9%-Q1’2020

INDIAN GDP ANNUAL GROWTH RATE HAVE SLIP DOWN BY 23.9% in Q1’2020

 

India GDP growth rate has fall by 23.9% in Q1'2020

 

 

 

The Indian GDP growth rate has shown a shrank of 23.9% during April-June of 2020. This is 41 years low in Indian history. Except for the agriculture sector all the other the sector has seen a deep red drop in Q1’2020.



In early January 2020, the Indian GDP was 3.1%, the same was the lowest. Last year’s Q1’2019 GDP was 8.1%.

The fall was more than the prediction. Technically if the next quarter sees a fall, then it will end up in a recession. The last time Indian went into recession was 1979 and the GDP at that time was -5.2%. The data was released by National Income accounts.

The current fiscal deficit is at Rs. 1.59 lakhs Cr which was Rs. 3,000 Cr in the last year. The major reason is the lockdown due to COVID-19. This has made the manufacturing and service sectors into great trouble. Also, the GDP has slipped even before the COVID-19.

Even during the great recession of 2008, the GDP hasn’t fallen at the same rate.

This news has made the Indian economy in huge trouble as the contraction in GDP is the highest among the G7 countries.

Let us find each and every sector’s results.

 

AGRICULTURE:

 

Agriculture is the only segment, which has shown a growth of 3.4% from 3% of the previous year Q1. Even though it has shown a positive result, it can’t make a great impact on the total shrank.

 

CONSTRUCTION:

 

The sector has landed up with -50.3% in growth, which was a growth of 5.3% in the last year. The real estate market was waiting was a correction as it was at high boom.

Due to extended lockdown in India, the real estate market has crashed heavily and it directly impacted the construction sector on its growth.



 

HOTELS AND TRANSPORTATION:

 

One of the sectors which had a great impact in recent time is hotels and transportation. Still, these sectors haven’t got the resolution to operate, on care for citizens to fight against the novel virus spread.

The sector has fallen by -47%, which was at 3.5% growth in the last year. The data was established by national income data.

 

MANUFACTURING:

 

The sector has recorded the ever worst fall in history accounting for -39.3%, compared with 3% growth of last year.

The sector might show a positive result in terms of GDP growth in Q2’2020 as most of the manufacturing sites have revived in the second half of 2020.

 

OTHER SECTOR:

 

The mining and quarrying sector has registered -23.3% growth which was 4.7% growth last year.

The business services have contracted by -5.3% and utilities have contracted by -7%.

 

GDP AND OTHER ECONOMIC FACTORS:

 

As same as GDP other predominant economic markers also have shown a great depression.

 

UNEMPLOYMENT:

 

The unemployment rate is at 11% which equals the unemployment rate of the USA. The data was as per June’2020 record. Which has come down from 23.5% from May’2020. The June data has shown pleasant as many startups have emerged in India.

Hopefully, the current GDP result shouldn’t do impact the unemployment rate. If it causes any damage, it is a big indicator of recession.

 

GROSS VALUE ADDED (GVA):

 

GVA which is calculated by GDP minus taxes. This would be considered as the key economic parameter by experts has shown -22.8% growth. The same was 4.8% growth in the last year.

 

INFLATION RATE:

 

The inflation rate has spiked up to 6.93% in July 2020 and the TE forecast is around 10%. If the inflation rate increases, the repo rate has to increase to avoid stagflation.

Currently, the inflation rate is more than 7%. So, people have to be more cautious in handling their personal financial management.



 

INSIGHTS FOR INVESTORS:

 

Even before the GDP growth rate results to launch, the market index has fallen down by 2%. There was India-China border tension has supported GDP in the fall of the index.

Midcap Index has fallen down almost 4% on 31st August 2020. Nifty small-cap 100 has shrunk by about 4.75%.

Adding GDP growth rate result of Q1’2020. The investor would see another correction in the market. The index values are not predicted but the market needs an immediate correction, which will be supported by GDP data.

Investors should wait here and watch as the current Nifty 50 index P/E is at 32, which is an all-time high. The economic condition is a complete reverse of the stock market values. Even our RBI governor has stated, “Stock market doesn’t show the values related to the economy of our country”.

Even the forecast for GDP for Q2’2020 is about -18.3%. If two continuous quarters are in negative growth, the economy will be in a recession. So, as an investor, you should be more careful about not losing your capital.

Be vigilant in the market and don’t go back towards the price. Always be an intelligent investor and look for the values of investing.

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