After 3 quarters of weak GDP growth in FY20, the Indian economy may have to brace itself for the worst fourth quarter in terms of GDP growth. Most experts believe that the GDP figure in the fourth quarter ending March 2020 could be a big shocker.
Back to the Hindu rate
The concept of Hindu rate of growth was first propounded by Prof. Raj Krishna in 1978 referring to the near-stagnation between 1950 and 1980. The GDP grew at just 3.5% and per capita income at just 1.5% annually, keeping millions in poverty. Economists are now predicting that after nearly 3 decades of a much higher rate of growth, the Indian economy could revert to the Hindu rate of growth once again in FY20 as the fourth quarter could be a washout.
Estimates of growth vary but the story is almost the same. CRISIL has pegged the GDP growth for FY20 at just about 3.5%. Since the first 3 quarters of the year have seen growth rates of 5%, 4.5%, and 4.7% respectively, it actually translates into negative (-0.2%) growth in the fourth quarter. Moody’s has also been talking about a similar stagnation in the fourth quarter. Moody’s projects 2.5% growth in GDP for the calendar year 2020, which could also translate into negative growth in March quarter and flat to a negative rate of growth in the June quarter. The message is clear; it is back to the Hindu rate of growth in 2020.
