Thread by @mihirssharma

Here is this evening's press release on the 2019/20 and Jan-Mar GDP figures. Headline growth is better than many had forecasted -- but remember both periods included only one week of lockdown. (1/n)

mospi.gov.in/sites/default/…

Some worrying bits about the GDP figures, though. Gross fixed capital formation (overall investment) has actually decreased in India in 2019/20. Down ~3%, when it was up ~10% last year. According to World Bank data, this hasn't happened since 2002. (2/n)
data.worldbank.org/indicator/NE.G…

This is a problem, of course, because investment is what gives you growth. Note the govt data says GFCF began slowing well before COVID -- in fact, in Apr-Jun 2019. That's important. Growth impulses in the economy were at *unusual lows even before* the pandemic hit.

(3/n)

So the headline GDP growth in Jan-Mar 2020 of 3.1% annualised may be a product of the overall slowing of the economy more than the pandemic, which will really show up in Apr-Jun 2020 figures.

(4/n)

This is even clearer if you look at the sequence of quarterly GDP growth figures in this new data print, starting from Apr-Jun 2018 and up till Jan-Mar 2020. It is
7.% -> 6.2 -> 5.6 -> 5.7 -> 5.2 -> 4.4 -> 4.1 -> 3.1%. I'd say the trend is pretty clear....

(5/n)

This GDP estimate may change as more data emerges -- but if so, it will likely be downwards. Many note statistical discrepancies in Jan-Mar 2020 are large and +ve, about 4% of GDP ex-discrepancies. (We have seen large discrepancies before, especially in fourth quarters.)

(6/n)

So the news is sobering rather than good. India's economy was in trouble not seen since the 1990s even *before* the pandemic hit. People can disagree about how far govt policy/mismanagement is responsible, but the slowdown itself seems clear from the data.

(7/n)

And it is not as if the government is overflowing with resources with which to tackle the slowdown. We have just been told the fiscal deficit for 2019/20. It is 4.6% of GDP. The Budget a few months ago had said it would be 3.8%. We've no money.

(8/n)
cga.nic.in/MonthlyReport/…