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Q2FY20 GDP growth could be at 4.5%, says Indranil Pan of IDFC First Bank

The Indian economy expanded 5 percent in the April-June period, its slowest annual pace since 2013. The second-quarter gross domestic product (GDP) data is due this Friday and the expectation is it could be sub 5 percent.
"After the 5 percent data for Q1, we were looking at a 5.3 percent number. But after looking at all lead indicators, we are now at 4.5 percent in terms of GDP number for Q2FY20," said Indranil Pan, Chief Economist, IDFC First Bank.
One key lead indicator will be government expenditure, he said, adding that the government has been forwarding its expenditure pattern in a significant way in Q2 and that probably will have a buffering effect on the downside bias that GDP has.
Regarding personal and government finance consumption, he said personal consumption is likely to continue to be weak. “Last quarter it was 3.1 percent, this time it is likely to be 3 percent growth. On the expenditure side the net trade could save GDP from going lower than 4.5 percent because the import numbers will be a lot lower than export numbers,” Pan said in an interview with CNBC-TV18.
Moreover, there would be some reflection on government final expenditure which would work positively for GDP number, he said.
Talking about some positive hopes for the economy, he said the festive season hasn’t been as bad as expected, currency in circulation has significantly risen in the past month and there has been some turnaround in personal vehicle sales numbers as well. However, one is not certain whether this would continue.
He said some of the other factors to look at would be the global scenario in terms of US-China trade and elections in the UK.
“For FY20 we are looking at a GDP number of 5.3 versus the previous estimate of 5.8 percent. The second half would be better than the first half - one because of base effect and two because of policy push that the government has done,” he said.
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