Q3 GDP grew because of base revision

Q3 GDP grew because of base revision

Without the base revision, GDP growth would have declined 0.6 per cent in December quarter, noted Motilal Oswal

Indian economy emerged from a technical recession in December quarter after two quarters of contraction, shows government data released on Friday. The GDP figures for quarter ended December 31, 2020, marked a marginal increase of 0.4 per cent. However, this growth was on account of downward revision in GDP figures for Q3 FY20, noted financial services firm Motilal Oswal.

India's real GDP grew 0.4 per cent YoY in 3QFY21, primarily because of downward revision (from 4.1 per cent to 3.3 per cent) in Q3 FY20. Without base revision, there was a decline of 0.6 per cent YoY in the quarter. The consensus was +0.5 per cent and our forecast was (-)0.7 per cent," notes Nikhil Gupta, Economist - Institutional Equities, Motilal Oswal.

The financial services firm also contradicted the government advanced estimates for Q4 FY20 and the entire financial year 2020-21, although on a positive note.

"Surprisingly, CSO expects a contraction of 1.1 per cent YoY in Q4 FY21, implying 8 per cent fall in FY21. This is highly unlikely. We believe real GDP could grow 3.5 per cent in the current quarter, leading to a decline of 6.7 per cent in FY21," says Gupta.

As per government data released on Friday, India's GDP grew 0.4 per cent in the third quarter of this fiscal, driven primarily by investment and government expenditure, as private expenditure lagged behind.

"GDP at Constant (2011-12) Prices in Q3 of 2020-21 is estimated at Rs 36.22 lakh crore, as against Rs 36.08 lakh crore in Q3 of 2019-20, showing a growth of 0.4 per cent," government data showed.

Second advanced estimates reflected that real GDP in the financial year 2020-21 will decline 8 per cent, as compared to 4 per cent growth in the previous fiscal.

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Published on: Feb 26, 2021, 7:59 PM IST
Posted by: Vivek Punj, Feb 26, 2021, 7:59 PM IST