This Q4FY20 GDP is not a true indicator of what we could see in Q1FY21; these numbers are still, to a very large extent, pre-Covid days.

The economy for Q4 was open for 84 days out of the 91 days so this growth that we are seeing today is nothing about what we could see in Q1. But when you go into the intricacies of the GDP, you realise that growth had started lagging from early March and it was agriculture, public admin and mining, as expected, which really saved the day. What this also means is that though the Covid problem came in towards the end of March, the economy as such was lagging in Q4. So now we have to contend with an economy as such which was slowing and all that now being eclipsed by the pandemic.

The Q4FY20 GDP came in at 3.1% v/s 4.1% (QoQ) and 5.7% in Q4FY19. And GDP for FY20 was at 4.2% v/s 6.1% in FY19. In terms of GVA, in Q4, it grew by 3% v/s 4.5% (QoQ).

Insights into the numbers (QoQ):

• Agriculture – 5.9% v/s 3.6%
• Mining – 5.2% v/s 2.2%
• Manufacturing – (-)1.4% v/s (-)0.8%
• Electricity, gas, water, public utilities – 4.5% v/s (-)0.7%
• Construction – (-)2.2% v/s (-)0.04%
• Trade – 2.6% v/s 4.3%
• Financial, realty, professional services – 2.4% v/s 3.3%
• Public Admin – 10.1% v/s 10.9%

And there was all round revision in GDP – that for Q1 was revised downwards from 5.6% to 5.2%; for Q2 from 5.1% to 4.4% and that for Q3 from 4.7% to 4.1%.

We already got an insight into what to expect when we saw the core sector output which came in a little before the GDP. The core sector output declined 38.1% in April while production of eight sectors—coal, crude oil, natural gas, refinery products, fertiliser, steel, cement, and electricity- contracted by 9%. This marks the worst performance by the key infrastructure areas going back to 2005.

Entire April the country was shut down and even in May, most parts of the country remained shut. So what we could see in Q1 could be the biggest shocker. June, even if some parts open up, given the migrant crisis, finding labour to run the factories will be the biggest challenge.

Various economists have given their own estimates of their GDP for Q1 but the worse comes from Goldman Sachs, which see’s India’s GDP contracting by a massive 45% in the June quarter.

For now, Q4 numbers hold no validity as the situation has changed completely in Q1 and it remains ever evolving. The market will pretty much ignore these numbers on Monday as everything will hinge upon whether or not the lockdown ends on 31st May.