The Indian economy grew nearly a seven-year low at 4.7 percent in the December quarter sinking further from an upwardly revised 5.1 percent in the previous quarter. The new data released by the government on Friday evening has cleared that the worse is yet to come for the economy. The unprecedented contraction in investment and manufacturing output in September and October quarter has dragged the country's economic growth to a 27-quarter low of 4.7 percent.
As per a report in the Economic Times, the rapid spread of Coronavirus is expected to further disruption, delaying a recovery. Madan Sabnavis, chief economist, Care Ratings, "The estimates do not take into account the impact of the coronavirus which several companies have reported would have a negative impact in Q4."
The numbers are seriously concerning as the December quarter is regarded as the festive season quarter but the growth still remained tepid. DK Pant, chief economist, India Ratings and Research, said, "Despite 3Q generally being one of the strongest quarters due to the festival season and higher rural spending driven by Kharif harvest, the growth slowdown is continuing. Although some high-frequency data suggested some improvement for a month or two... it tapered off after that."
The government remains in denial mode
Turning a blind eye to the struggling state of the economy, Finance Minister Nirmala Sitharaman argued that the "steadiness" in the economy is a good sign. Even the economic affairs secretary Atanu Chakraborty said, "We have already bottomed out." On the threat from Coronavirus, Sitharaman said there is no need to press the "panic button" but admitted that things may become critical if the issues prolong for another two or three weeks.
The economy is likely to erode further in the coming quarters amid the fears of coronavirus. On Friday, markets across the globe witnessed a major crash. The stocks at Bombay Stock Exchange tanked 1448 points, the biggest in four and a half years. Further, the Reserve Bank of India is unlikely to cut rates anytime soon to support growth given the inflation already swelling to an alarming level.