GDP growth figures for December quarter will be announced on Friday evening. Economists remain divided if the Indian economy will rebound or the slowdown will get worse in Q3. Many estimates point towards a modest pick-up in the third quarter. However, predictions in the previous quarters have proved wrong.
So far, all forecasts fall in the range of 4.3-5 per cent. State Bank of India Ecowrap's latest report suggests India's GDP growth will remain flat at over six years low of 4.5 per cent in Q3 of FY20. The agency, however, revised its FY20 growth estimate to 4.7 per cent from the earlier estimate of 4.6 per cent.
DBS Bank pegs the December quarter growth at 4.4 per cent and GVA at 4.3 per cent on the back of restocking demand, coupled with stabilising corporate earnings. Other forecasts by major banks and rating agencies for the third quarter include 4.5 per cent by YES Bank; 4.5 per cent by Kotak Bank; 4.8 per cent by HDFC bank; 4.6 per cent by IDFC First Bank; 4.5 per cent by CARE Ratings; and 5.1 per cent by CRISIL.
Also read: India Ratings projects country's FY21 GDP growth at 5.5%
Despite these somewhat positive numbers, current economic indicators suggest the economy may still not be out of slumber. Some improvement was seen in October and November but many high-frequency indicators showed negative growth in December. IIP-consumer goods, core sectors and automobile sales and exports figures have remained in the red.
Industrial Production (IIP) for December 2019 shows the factory output falling 0.3 per cent. The retail inflation for the month worsened to 7.59 per cent in January 2020. This is the highest rate of inflation since May 2014, when it was 8.33 per cent.
This is also the second month that inflation has remained above the upper limit of 6 per cent set by Reserve Bank of India (RBI). Other indicators like mining, manufacturing, electricity, primary goods showed slight improvement but capital goods, infrastructure goods and consumer durables declined between 2.6 to 12.3 per cent, according to the Ministry of Statistics and Programme Implementation's data from April-December period of the current fiscal.
Also read: Q3 GDP growth to be announced Friday; SBI report warns of coronavirus impact
In the previous quarter too, analysts' prediction on GDP proved wrong. Rating agencies India Ratings and ICRA and Kotak Economic Research -- all of them expected the growth numbers to be at 4.7 per cent, but the actual numbers proved otherwise. India's GDP growth rate had slowed down to 4.5 per cent in the July-September quarter. This was the slowest growth rate Indian economy registered in six and a half years. The decline in economic growth came on the back of dwindling consumer demand, slowing private investment and global slowdown.
Also read: GDP growth slows down to 4.5% in Q2, hits more than 6-year low