Has the Indian economy rocketed back to positive growth? Which are the sectors that have revived faster? Which are the laggard sectors? What has been the pace of infrastructure project execution? How far is the manufacturing sector from reaching pre-Covid levels?
The national income statistics will offer cues on some of these questions.
The NSO (National Statistical Office) will release gross domestic product (GDP) growth estimates for the third quarter (October-December) 2020-21 on February 26. Here are three things to watch out for in the data.
1. Back to positive?
India had slipped into a technical recession during July-September when gross domestic product (GDP) fell for two successive quarters.
India’s real or inflation-adjusted GDP shrank 7.5 percent during July-September this year, confirming fears of a crippling slide across several industries and services that continue to bleed profusely through multiple deep cuts caused by Covid-19-induced disruptions.
This contraction came on the back of a nearly 24 per cent fall in April-June.
Many analysts have placed high chances on India’s real GDP growing at more than 0 per cent in October-December 2020, marking a return to a positive trajectory after two quarters of a deep slide.
2. Growth in current prices
In current prices, India’s GDP contracted 4 per cent during July -September over the corresponding quarter of the previous year.
This represented a massive swing compared to 22.6 per cent fall in the first quarter.
GDP growth in current prices could show how far India is from reaching pre-Covid levels of economic activity.
3. Revival in manufacturing
The big takeaway from the previous quarter’s (July-September) data was from the manufacturing sector that grew 0.6 per cent in during the second quarter of 2020-21 compared to the same quarter last year.
Effectively, this implied that the output from factories this year is greater not just over the previous three months, but also compared to last year when the state of the economy was far rosier than it is now.
Indications are that the manufacturing sector may have accelerated in the subsequent months.
Goods and services tax (GST) collections are set to cross the Rs 1 lakh crore mark for the fifth successive time in 2020-21, a clue that households are spending more than the previous months.
Passenger vehicle sales have also clocked robust growth, particularly during the third quarter buoyed by festive season buying, and petrol and diesel sales are back to pre-Covid levels.
These are good markers of an expansionary phase, meaning there is greater activity in companies and factories compared to the previous two quarters when restrictions had halted the economy.
All eyes will be on the third quarter GDP data to gauge the trends in the manufacturing sector’s activity.