Indian shares were flat on Friday, ahead of GDP data that is likely to show Asia`s third-largest economy entered a recession in the September quarter in a coronavirus-induced slump.

A slight dip in IT services shares was countered by a 1.53% rise in automotive stocks before the release of monthly vehicle sales figures from Tuesday. Indian markets will be closed on Monday for a local holiday.

India`s economic activity likely picked up in July-September after a record 23.9% contraction the previous quarter, data due around 1200 GMT is expected to show.

Economists in a Reuters poll forecast gross domestic product (GDP) to shrink 8.8%, a contraction that would still amount to a technical recession.

"In spite of the impact of lockdowns, if negative growth starts to come down, that itself is positive," said A.K. Prabhakar, head of research at IDBI Capital in Mumbai.

"If it goes beyond a 13% fall in GDP, it might have an impact on the markets. But if it`s 9%, that is very good."

The NSE Nifty 50 index was down 0.09% at 12,975.85 by 0500 GMT, while the S&amp;P BSE Sensex was 0.18% lower at 44,178.89.

Both indexes were on course to end the month about 11.5% higher — their second best monthly performance this year, after a 14.7% gain in April — powered by record inflows from foreign institutional investors and progress on COVID-19 vaccines.

Tata Motors jumped 5.1% and Bajaj Auto rose 3.2%, leading the list of gainers on the Nifty 50.

IT services firm Tata Consultancy Services fell 1.1% and was among the top drags on the index.

Other Asian shares stalled near record highs as investors weighed renewed doubts about AstraZeneca`s COVID-19 vaccine against hopes that some of the region`s economies will recovery quicker than their Western peers.

Indian shares were flat on Friday, ahead of GDP data that is likely to show Asia`s third-largest economy entered a recession in the September quarter in a coronavirus-induced slump.

Indian shares were flat on Friday, ahead of GDP data that is likely to show Asia`s third-largest economy entered a recession in the September quarter in a coronavirus-induced slump. A slight dip in IT services shares was countered by a 1.53% rise in automotive stocks before the release of monthly vehicle sales figures from Tuesday. Indian markets will be closed on Monday for a local holiday. India`s economic activity likely picked up in July-September after a record 23.9% contraction the previous quarter, data due around 1200 GMT is expected to show. Economists in a Reuters poll forecast gross domestic product (GDP) to shrink 8.8%, a contraction that would still amount to a technical recession. "In spite of the impact of lockdowns, if negative growth starts to come down, that itself is positive," said A.K. Prabhakar, head of research at IDBI Capital in Mumbai. "If it goes beyond a 13% fall in GDP, it might have an impact on the markets. But if it`s 9%, that is very good." The NSE Nifty 50 index was down 0.09% at 12,975.85 by 0500 GMT, while the S&P BSE Sensex was 0.18% lower at 44,178.89. Both indexes were on course to end the month about 11.5% higher — their second best monthly performance this year, after a 14.7% gain in April — powered by record inflows from foreign institutional investors and progress on COVID-19 vaccines. Tata Motors jumped 5.1% and Bajaj Auto rose 3.2%, leading the list of gainers on the Nifty 50. IT services firm Tata Consultancy Services fell 1.1% and was among the top drags on the index. Other Asian shares stalled near record highs as investors weighed renewed doubts about AstraZeneca`s COVID-19 vaccine against hopes that some of the region`s economies will recovery quicker than their Western peers.

Sensex, Nifty flat ahead of GDP data; autos rise

The Economic Survey 2018-19 was presented in the Parliament, as is the practice, a day before the Union Budget.&nbsp;

The survey points out that amid weak global growth during the last five years, India took a few giant strides forward becoming the sixth largest economy as well as the fastest growing major economy in the world.&nbsp;

The average inflation was less than half the level of the preceding five years, lowest in post-independence history.&nbsp;

According to the survey, the Indian economy is projected to grow at 7 per cent&nbsp;in 2019-20, up 0.2 per cent&nbsp;from 2018-19, on the back of political stability, which is likely to push up economic activity in the country (activate the animal spirits).&nbsp;

To achieve the Prime Minister’s dream of India becoming a $5 trillion economy by 2025, India needs to attain and sustain a real GDP growth of 8% per annum. “This can be achieved by a ‘virtuous cycle’ of savings, investment and exports catalysed and supported by a favourable demographic phase,” says the survey.

Low oil prices compared to 2018-19 is expected to push the consumption, while low real interest rates are expected to provide a boost to investment; the two key levers of the Indian economy.&nbsp;

Investment is the ‘key driver’ of the Indian economy, accounting for 32 per cent&nbsp;of the GDP. The survey points out that the investment rate, which was declining from 2011-12, seems to have bottomed out. Fixed investment growth has increased from 8.3 per cent&nbsp;in 2016-17 to 9.3 per cent&nbsp;in 2017-18 and 10.0 per cent&nbsp;in 2018-19.&nbsp;

Investment is expected to pick up further on the back of higher credit growth, facilitated by lower interest rates and improved demand facilitated by a strong mandate, clearing all theories of political uncertainty.

Higher investments are likely to foster job creation; unemployment being a major issue facing the economy at a 45-year-high.&nbsp;

As per a CRISIL report, system-wide NPAs have declined to 9.3 per cent&nbsp;as of March 2019 after tripling to 11.5 per cent&nbsp;in the four fiscals till March 2018.&nbsp;

The continuing resolution of stressed assets in the banking sector highlighting the success story of the Insolvency and Bankruptcy Code is expected to give a fillip to the capex cycle, as per the Economic Survey.

India, unlike China, is a consumption-led rather than export dependent economy. India witnessed a deceleration in private final consumption in Q3 and Q4 of 2018-19, thus resulting in a slowdown in GDP growth.

The survey points out that this could have been due to low farm incomes in rural areas arising from low food prices and also due to the stress in non-banking financial companies (NBFCs), which affected its lending.

Private final consumption expenditure accounts for 60 per cent&nbsp;of India’s GDP with its growth rate mostly being higher than the overall GDP growth rate.&nbsp;

Consumption is likely to pick up with an increase in rural wages, higher food prices (higher MSPs) and income support scheme of Rs 6,000 per year to farmers. All these measures are likely to boost rural demand.&nbsp;

However, a weak monsoon and spill over impact of stress in the NBFC sector, present downside risks to consumption, says the survey.

June 2019, the first month of the monsoon season, recorded a 33% deficient rainfall — the worst in the last five years. Although IMD expects a near normal rainfall, region wise imbalances are expected to arise impacting crop production and agriculture growth.&nbsp;

The liquidity crunch faced by the NBFC sector due to IL&amp;FS default, loss of investor confidence and recent default by DHFL, shows that the sector is under stress.&nbsp;

Non-performing loans are rising, currently at 6.1%, while the credit disbursements fell by 31 per cent&nbsp;in Q4 2018-19. All this is likely to lead to lower credit offtake from NBFCs, which may dampen growth in consumption spending, the survey stresses. &nbsp;

As per the Economic Survey, the growth rate of the world output is projected to fall further to 3.3 per cent&nbsp;in 2019 (-0.3 per cent). The US and China trade war, the outcome of Brexit and downside risk to China’s growth, all point towards weak global cues. In this light, export growth could remain weak, which in turn could impact India’s GDP growth. &nbsp;The survey lays out a strategic blueprint for fructifying #Economy@5trillion. Now over to the Budget today!

(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-don-t-underestimate-global-economic-impact-on-india-s-gdp-2768191">original article)</a>

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)&nbsp;

The Economic Survey 2018-19 was presented in the Parliament, as is the practice, a day before the Union Budget. The survey points out that amid weak global growth during the last five years, India took a few giant strides forward becoming the sixth largest economy as well as the fastest growing major economy in the world.

The Economic Survey 2018-19 was presented in the Parliament, as is the practice, a day before the Union Budget. The survey points out that amid weak global growth during the last five years, India took a few giant strides forward becoming the sixth largest economy as well as the fastest growing major economy in the world. The average inflation was less than half the level of the preceding five years, lowest in post-independence history. According to the survey, the Indian economy is projected to grow at 7 per cent in 2019-20, up 0.2 per cent from 2018-19, on the back of political stability, which is likely to push up economic activity in the country (activate the animal spirits). To achieve the Prime Minister’s dream of India becoming a $5 trillion economy by 2025, India needs to attain and sustain a real GDP growth of 8% per annum. “This can be achieved by a ‘virtuous cycle’ of savings, investment and exports catalysed and supported by a favourable demographic phase,” says the survey. Low oil prices compared to 2018-19 is expected to push the consumption, while low real interest rates are expected to provide a boost to investment; the two key levers of the Indian economy. Investment is the ‘key driver’ of the Indian economy, accounting for 32 per cent of the GDP. The survey points out that the investment rate, which was declining from 2011-12, seems to have bottomed out. Fixed investment growth has increased from 8.3 per cent in 2016-17 to 9.3 per cent in 2017-18 and 10.0 per cent in 2018-19. Investment is expected to pick up further on the back of higher credit growth, facilitated by lower interest rates and improved demand facilitated by a strong mandate, clearing all theories of political uncertainty. Higher investments are likely to foster job creation; unemployment being a major issue facing the economy at a 45-year-high. As per a CRISIL report, system-wide NPAs have declined to 9.3 per cent as of March 2019 after tripling to 11.5 per cent in the four fiscals till March 2018. The continuing resolution of stressed assets in the banking sector highlighting the success story of the Insolvency and Bankruptcy Code is expected to give a fillip to the capex cycle, as per the Economic Survey. India, unlike China, is a consumption-led rather than export dependent economy. India witnessed a deceleration in private final consumption in Q3 and Q4 of 2018-19, thus resulting in a slowdown in GDP growth. The survey points out that this could have been due to low farm incomes in rural areas arising from low food prices and also due to the stress in non-banking financial companies (NBFCs), which affected its lending. Private final consumption expenditure accounts for 60 per cent of India’s GDP with its growth rate mostly being higher than the overall GDP growth rate. Consumption is likely to pick up with an increase in rural wages, higher food prices (higher MSPs) and income support scheme of Rs 6,000 per year to farmers. All these measures are likely to boost rural demand. However, a weak monsoon and spill over impact of stress in the NBFC sector, present downside risks to consumption, says the survey. June 2019, the first month of the monsoon season, recorded a 33% deficient rainfall — the worst in the last five years. Although IMD expects a near normal rainfall, region wise imbalances are expected to arise impacting crop production and agriculture growth. The liquidity crunch faced by the NBFC sector due to IL&FS default, loss of investor confidence and recent default by DHFL, shows that the sector is under stress. Non-performing loans are rising, currently at 6.1%, while the credit disbursements fell by 31 per cent in Q4 2018-19. All this is likely to lead to lower credit offtake from NBFCs, which may dampen growth in consumption spending, the survey stresses. As per the Economic Survey, the growth rate of the world output is projected to fall further to 3.3 per cent in 2019 (-0.3 per cent). The US and China trade war, the outcome of Brexit and downside risk to China’s growth, all point towards weak global cues. In this light, export growth could remain weak, which in turn could impact India’s GDP growth. The survey lays out a strategic blueprint for fructifying #Economy@5trillion. Now over to the Budget today! (This article was originally published on The DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

Don’t underestimate global economic impact on India’s GDP

Dismissing the contention of former CEA Arvind Subramanian regarding over-estimation of GDP numbers, the government said Tuesday it follows accepted procedures and methodologies for arriving at projections of national income.

The Ministry of Statistics and Programme Implementation (MoSPI) also added that its projections of the Gross Domestic Product (GDP) growth are broadly in line with estimates of various national and international agencies.

Subramanian has deduced that India's economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP.

India's GDP growth rate between this period should be about 4.5 per cent instead of the official estimate of close to 7 per cent, he said in a research paper published at Harvard University.

"India changed its data sources and methodology for estimating real GDP for the period since 2011-12. This paper shows that this change has led to a significant overestimation of growth," he said in the paper.

The MoSPI said Subramanian's overestimation of India's GDP growth is primarily based on an analysis of indicators, like electricity consumption, two-wheeler sales, commercial vehicle sales using an econometric model and associated assumptions.

"The estimation of GDP in any economy is a complex exercise where several measures and metrics are evolved to better measure the performance of the economy," the MoSPI said.

With any base revision for GDP estimation, as new and more regular data sources become available, it is important to note that "a comparison" of the old and new series are not amenable to simplistic macro-econometric modelling, it said.

It may also be seen that the GDP growth projections brought out by various national and international agencies are broadly in line with the estimates released by MOSPI.

"The GDP estimates released by the Ministry are based on accepted procedures, methodologies and available data and objectively measure the contribution of various sectors in the economy," it added.

The ministry stressed that with structural changes taking place in the economy, it is necessary to revise the base year of macroeconomic indicators like GDP, Index of Industrial Production (IIP), Consumer Price Index (CPI), periodically to ensure that indicators remain relevant and reflect the structural changes more realistically.

Such revisions not only use the latest data from censuses and surveys, but they also incorporate information from administrative data that have become more robust over time.

In India, the Base Year of the GDP Series was revised from 2004-05 to 2011-12 and released on January 30, 2015, after adaptation of the sources and methods in line with the System of National Accounts 2008 (2008 SNA).

Dismissing the contention of former CEA Arvind Subramanian regarding over-estimation of GDP numbers, the government said Tuesday it follows accepted procedures and methodologies for arriving at projections of national income.

Dismissing the contention of former CEA Arvind Subramanian regarding over-estimation of GDP numbers, the government said Tuesday it follows accepted procedures and methodologies for arriving at projections of national income. The Ministry of Statistics and Programme Implementation (MoSPI) also added that its projections of the Gross Domestic Product (GDP) growth are broadly in line with estimates of various national and international agencies. Subramanian has deduced that India's economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP. India's GDP growth rate between this period should be about 4.5 per cent instead of the official estimate of close to 7 per cent, he said in a research paper published at Harvard University. "India changed its data sources and methodology for estimating real GDP for the period since 2011-12. This paper shows that this change has led to a significant overestimation of growth," he said in the paper. The MoSPI said Subramanian's overestimation of India's GDP growth is primarily based on an analysis of indicators, like electricity consumption, two-wheeler sales, commercial vehicle sales using an econometric model and associated assumptions. "The estimation of GDP in any economy is a complex exercise where several measures and metrics are evolved to better measure the performance of the economy," the MoSPI said. With any base revision for GDP estimation, as new and more regular data sources become available, it is important to note that "a comparison" of the old and new series are not amenable to simplistic macro-econometric modelling, it said. It may also be seen that the GDP growth projections brought out by various national and international agencies are broadly in line with the estimates released by MOSPI. "The GDP estimates released by the Ministry are based on accepted procedures, methodologies and available data and objectively measure the contribution of various sectors in the economy," it added. The ministry stressed that with structural changes taking place in the economy, it is necessary to revise the base year of macroeconomic indicators like GDP, Index of Industrial Production (IIP), Consumer Price Index (CPI), periodically to ensure that indicators remain relevant and reflect the structural changes more realistically. Such revisions not only use the latest data from censuses and surveys, but they also incorporate information from administrative data that have become more robust over time. In India, the Base Year of the GDP Series was revised from 2004-05 to 2011-12 and released on January 30, 2015, after adaptation of the sources and methods in line with the System of National Accounts 2008 (2008 SNA).

Government says it follows accepted procedures for GDP estimation

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Sensex, Nifty flat ahead of GDP data; autos rise

Don’t underestimate global economic impact on India’s GDP

Government says it follows accepted procedures for GDP estimation