By Ruma Dubey

The writing of Q1FY17 GDP data was as such no expected to be anywhere near Q4FY16 GDP numbers, given the overall slowdown. But before the GDP numbers came in, the core sector data was also a pointer to the very same fact and it was data galore; a very merry but busy time for the economists!

The July core sector output for July came in at 3.2% v/s 5.2% in June (MoM). Cement, Coal, fertilizer, steel, crude and electricity were down while Natural gas and Petroleum Refinery were the only two gainers.

A quick look at the core sector numbers: (MoM)

• Coal at 5.1% v/s 12.1%
• Natural gas 3.3% v/s -4.5%
• Petroleum Refinery at 13.7% v/s 3.5%
• Cement 1.4% v/s 10.3%
• Fertilizer at 2.5% v/s 9.8%
• Steel at 0.5% v/s 2.4%
• Crude 1.8% v/s -4.3% (Mom)
• Electricity was at 1.6% v/s 8.1%

On the fiscal deficit front, the data was not good. For April-July was at 73.7% of the budgeted target for the fiscal year ending in March 2017 v/s 69.3% (YoY).

Based on this data thus it did not come as a surprise to see that GDP for Q1FY17 came in lower at 7.1% v/s 7.9% (QoQ) and down from 7.5% (YoY). Core sector numbers as such showed a fall in cement, steel and most of the industries and the GDP numbers were in tandem with these numbers. But at the same time, what remains is that even in Q1FY17, India was the fastest growing economy as China’s GDP came in at 6.7%.

Gross Fixed capital formation for the quarter was down 3% (YoY) at Rs.8.6 lakh crore and this indicates that there is really no new investment which came in during current Q1 and that is worrisome. What does look skewed is that private consumption and Govt expenditure too was up.

The market, which has built up over the past few days in anticipation of these numbers could see some profit booking; the first quarter start for FY17 has not been great but yet a growth over 7% is very good. So like all micro data, this too will disappear in a flash and there will be a new event to look forward to. There is no RBI meet in September though all build-up will begin for the FOMC meet on 21st Sept.

Monsoon has been good and festivals are round the corner. Thus Q2 and Q3 will be more domestic demand driven and that is sure to see a sharp bounce back.