Gross Value Added, manufacturing in free fall

Mumbai: The Gross Value Added (GVA) growth numbers for the economy paints a grim picture with a free fall from Q1 of 2018-19 when it was 7.7% to the current number of 4.3% in Q2 of 2019-20.

The precipitous fall in GVA growth rates is alarming for the economy as a whole and the manufacturing sector in particular.

According to quarterly estimates of Gross Value Added (GVA) for the second quarter (July-September), Q2 of 2019-20 registered a growth of 4.3% compared to 6.9% in the Q2 of 2018-19, the corresponding period last year. This marks a steep drop in growth rates within a one year period.

Since Q1 of 2018-19, when the GVA was at 7.7%, the GVA has been falling every quarter since then.

It dropped to 6.9% in Q2, 6.3% in Q3 and 5.7% in Q4. In the current financial year year, 2019-20, it came down further to 4.9% in Q1 and the latest reading released on Friday is 4.3%.

Within the overall GVA pie, the big crash has come in the manufacturing sector. It has contracted by 1% as compared to a strong growth of 12.1% in Q1 of 2018-19. This is a very disturbing trend for manufacturing to crash from 12% plus rates to a negative growth of 1% within six quarters.

The chart mirrors the trend of overall GVA in coming down every quarter from Q1 of 2018-19. From 12.1% in that quarter, it came down to 6.9% in Q2, 6.4% in Q3 and then a massive crash in Q4 to 3.1%.

In the current financial year, it has been in free fall and from 3.1% in Q4 fell heavily to 0.6% and for the current quarter has contracted by 1% to end in negative territory.

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