InvestorQ : What exactly has led the GDP for the fourth quarter lower to 3.1%?
manisha Kolvenkar made post

What exactly has led the GDP for the fourth quarter lower to 3.1%?

Answer
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Mahima Roy answered.
4 months ago


Actually, there was not much of a surprise and a sharp fall in growth was factored. However, Q4 GDP at 3.1% was not as bad as was originally anticipated by the street. Of the trend continues to be lower. For example, the Q4 GDP marked the continuation of the trend of routinely lower GDP. The trend started in mid-2018 from a level of 7.7% and over the last 8 quarters the GDP has consistently fallen by over 450 bps. Of course, the real and full impact may be felt only in the first two quarters of FY21. What exactly led the GDP lower? Interestingly, agriculture saw a better growth at 4%; largely on the back of a robust Rabi crop. This brings agricultural growth to the target levels of the government for sustainable GDP growth. Manufacturing growth fell from 5.3% last fiscal to just 0.03% in the current fiscal with automobiles, commercial vehicles, steel and cement leading the way down. But the real culprit was services. With a weightage of over 60%, it was services that took a deep cut. Most key services like financial services, tourism, transport, travel, utilities and other services were sharply lower in Q4. You will have to wait for the actual numbers of the first two quarters of FY21 to get an idea of the lag effect.