Q2 GDP: A last-minute look at key barometers of the economy's health

With the second quarter (July-September) GDP numbers due today, here's a last-minute stocktaking of the indicators that go into the making of many key data points. Most of these reinforce the prevailing slowdown mood and hint at Q2 growth falling below 5 per cent.

India’s economy grew at 5 per cent in the first quarter of 2019-20, the slowest pace in over six years. Various rating agencies and financial institutions have pegged the 2nd quarter growth between 4.2 to 4.9 per cent.

Here's a close look at the data points:


Core sector
Output of core industries fell sharply by 5.2 per cent in September 2019 (year-on-year) as all sectors, with the exception of fertilisers, posted a decline in output. In August, it was almost flat at 0.1 per cent. The index was dragged down by decline in output of coal, crude oil, natural gas, cement, and electricity.

Factory output
Factory output contracted by 4.3 per cent in September, hitting a seven-year low. Negative growth in three key sectors — manufacturing, mining and electricity — pulled down the IIP, which had recorded 4.6 per cent growth in the same month last year.

In August, factory output contracted by 1.4 per cent after a gap of 26 months, reinforcing fears of a slowing economy and deteriorating consumer sentiment.

Core inflation
India’s core CPI has been shrinking for a year even as the headline CPI has started inching up on account of higher food prices. Falling core inflation is indicative of the wider slowdown faced by the industry. The RBI will have a tough task ahead as it meets in the first week of December to assess conditions for a sixth successive rate cut.

Manufacturing PMI
Factory production is now almost stagnant, with the Purchasing Managers’ Index (PMI) for manufacturing having slipped to a two-year low of 50.6 in October as against 51.4 in September.

Manufacturing activity slumped to a 15-month low (51.4) in August as sales slowed, forcing factories to cut back on production. First quarter GVA in manufacturing had slumped to 0.6 per cent and forecasts for the second quarter aren’t encouraging either.

GST collection
Pushed upwards by festive sales, GST collection improved a tad in October to Rs 95,380 crore, but remained lower than Rs 1 lakh crore mark set by the government.

Plunging to a 19-month low, GST collection fell 2.67% to Rs 91,916 crore in September on a year on year basis. It stood at Rs 98,202 crore, up 4.51% compared to Rs 93,960 crore in the same month last year.

Collections of over Rs 1 lakh crore a month are seen as healthy. The dip below Rs 1 lakh crore, therefore, is reflective of the larger slowdown in the Indian economy.