While the wait is not too long as the National Statistical Office will release the provisional estimates of GDP for FY20 on May 29 but expectations are already extremely muted. That's despite the fact that the full fiscal includes only 7 days of the lockdown. Experts and agencies have projected India's economic growth close to 4.2 per cent, almost 80 basis points down the government's second advance estimates of 5 per cent announced much before the country entered a complete lockdown from March 25 (12 AM).  Business Today research projection though is a bit more subdued, predicting GDP growth of just 4 per cent in FY 2019-20. These are based on extrapolation of leading parameters in FY20 compared to their nine months show during the fiscal.

The approach for compiling the advance estimates by the Central Statistics Office is based on benchmark-indicator method. The sector-wise second estimates were obtained by extrapolation of indicators which included index of industrial production of first nine months of the financial year, financial performance of listed companies in the private corporate sector available up to quarter ending December, 2019, second advance estimates of crop production, accounts of central & state governments, besides information on indicators like deposits & credits, passenger and freight earnings of Railways, passengers and cargo handled by civil aviation, cargo handled at major sea ports, sales of commercial vehicles available for first nine or ten months of FY20.

"For obtaining taxes on products at constant prices, volume extrapolation is done using volume growth of taxed goods and services and aggregated to get the total volume of taxes. Annual forecast of indicators which are available for first nine or ten months is based on regression using seasonal dummies to account for seasonal fluctuations," stated the February release of the second advance estimates for FY20.

It further listed out the changes in the main indicators used in the estimation which we considered for our assumptions. Sample this - Performance of a host of the leading indicators deteriorated further for the full fiscal compared to the first nine months. The mining sector output growth de-accelerated from 1.7 per cent to 1.1 per cent during the period and the manufacturing sector output contracted during Apr-March' 20, for the first time in at least five years. This was led by a poor show of the eight core sectors which contribute over 40 per cent of the IIP.

Some prominent ones including production of natural gas and cement saw growth slipping by 250 and 150 basis points (bps), respectively over the nine months to 12 months period. Freight earnings of Railways, passengers handled by civil aviation and sales of commercial vehicles too faced the heat of subdued demand. The same was confirmed by a slow growth in bank credit which grew at 9.2 per cent, year-on-year, during Apr-Dec'20 versus an overall 6.1 per cent rise in FY20. Aggregate deposits grew at a pace of 9.8 per cent compared to 7.9 per cent increase during the said period. So broadly, all these indicators, on an average, dipped almost 100 bps from their last levels rendering an equivalent impact on India's GDP growth.

The other growth engines of the economy were losing steam too amid already weak demand and consumption. The merchandise exports (in dollar terms) dipped nearly 5 per cent, y-o-y, after a gap of four years and the gross tax revenue declined by 0.8 per cent during the April-Feb'20, compared to the corresponding period last year.        

Yet, some green shoots had appeared with IIP, index of core industries and merchandise exports rebounding with positive growth in February 2020 along with signs of revival in consumer sentiment, but a seven-day period of economic inactivity due to the lockdown weighted substantially on the last quarter's performance squashing the incipient recovery in the economy.

Besides trade, negative growth in IIP and eight core indices and decline in electricity generation in March 2020, reflected the economic adversity of the lockdown.