 You're watching News Made Easy. I am Anandya Chakravarty. So it's officially official now. This has been the worst year ever for India's economy, ever since India's independence. The last time our national income, which is the total income generated by all sectors, everyone in the economy contracted or reduced, was in 1979, 42 years ago during the oil shock. When petrol prices went up across the world and there was a global recession. This time it's because of COVID. There has been a global recession. Almost every economy has been hit by it. India pretty badly. The only exception has been China, which grew marginally by about 2 odd percent in 2020. Now for India, if we look at the GDP numbers that have just come out on Monday, there are some green shoots, which is some positive numbers have come out for the first three months of this year. Now remember GDP is calculated on the basis of fiscal years, which is 1st of April to 31st March of the next year. So it is always two years that are taken together, right? You know about that. So the GDP that we're looking at is the GDP for 2020-21, which is the 1st of April 2020 to 31st March 2021. And the first three months of this year, which is 2021, becomes the last three months of the fiscal year, right? Because January to March is the last quarter of the fiscal year. So Q4, the fourth quarter of the fiscal year, is showing some signs of recovery. Now it's marginal, just a shade over 1%, 1-1.5%. But that's better than what most economists expected. They expected India's GDP to grow in the last quarter of the fiscal year by about 1%. It's beaten that. Where the numbers are even better is actually when we look at the gross value added. What is that? That is the value added in the overall economy. We take aside, if we put aside taxes and subsidies by the government. So if we look at gross value added, then India has grown by more than 3.5%, about 3.7%, which is significantly better if we compare what economists expected, who expected a growth of about 2.5%. Now, what is more heartening you could say is the fact that manufacturing sector, which is factory output, things that are produced in factories, that has grown by almost 7%. And remember that this is a period when India believed that it has beaten COVID. So things were picking up. Demand was picking up from the end of 2020. We know that there was a decent festival season that took place. So that recovery continued in the first three months of this year. And as we can see compared to last year, there's a 7%. 6.97% growth in value added by manufacturing of the factory sector. If we go to utilities, which is electricity that is supplied to you, water that you consumed, gas, that grew by more than 9%. So again, very good growth in utilities, the value added by utilities. Come to construction, it's even better, more than 14%. That's a very decent recovery for the construction sector. And remember, that would be some amount of pent-up demand because a lot of construction would have stopped during the lockdown, which was in the process of being done. And that picked up in the first three months of this year. So these are three very positive growth. Again, services, professional services that we avail of, which is banking, financial sector, other professional services, real estate, lawyers, things like that. That has also grown decently by about 5.5%. So overall, a decent growth, if one looks at the value added. The place where there seems to have been continued slowdown, obviously, because that's going to take time to recover, which is tourism, hotels, restaurants and things like that. That has taken time to recover. That is still in the negative zone. And mining, again, has been in the negative zone. That's not really grown. Now, think about it. What we have is decent growth in the factory sector, decent consumption of utilities, and very good growth in construction. And again, decent growth in services. Shouldn't that also show up in domestic consumption, as in what you and we are consuming? Now, in the numbers that the government puts out, there's something called private final consumption expenditure, which is called PFC. Now, that stands in for household consumption. It's a proxy for household consumption, everything that you and I are consuming. What has happened there? What we see is that private final consumption expenditure has grown by just a little bit above 2%, 2.5%. That is pretty bad. Considering that manufacturing has grown, construction has grown, utilities have grown, services have grown, who was consuming all of that? Where has it gone? It suggests that households or people like you and me haven't been consuming it, because that hasn't really grown. What has stood in for that is essentially government final consumption expenditure. Government sector consumed and allowed these factories to kind of grow. It allowed utilities to grow. And perhaps some of that construction is also showing up in the building of assets. So, we are seeing government final consumption expenditure or what the government spends has gone up by 28%. There's an interesting thing here that if you look at the way government final consumption expenditure is calculated, durables consumed by the Defense Department, which is the Army, Navy, etc., is actually put under government final consumption expenditure, even though it's a durable. It is something that is going to be used later. It's not considered to be a capital or equipment or machinery that will be used later. Let's look at capital formation. That has grown dramatically. That, again, is a significant growth. Capital formation, which is factories, new construction, machines bought, equipment bought, that has gone up by double digits. What is a cause for concern is that inventories have also gone up by 12%. Inventory stock has gone up by 12%. So, we see capital formation, which is essentially things that are used to produce later. It's a form of investment that has gone by 11%. Stocks and inventories have gone up by 12%. So, what are we seeing? Consumption demand in the economy has actually not picked up. It is the government which is standing in to consume. Its consumption has gone up by 28%. Construction has revived. So, some kind of capital formation has taken place. And it's possible that companies have produced, assuming that demand will come back. And it's showing up in inventories. Inventories that have built up and maybe inventories that have been pushed out to the dealership channels. Cars which might have ended up with dealerships. Gadgets which have ended up in dealerships but not been sold. So, consumption has not revived. Now, this is a problem. We know that the second wave actually peaked from April-May. So, at least two months out of the three in the first quarter of this fiscal, which is 21-22, is going to see bad consumption growth, bad production. And yet an inventory which has been pushed out, yet investments for future consumption. So, this is a worry. Now, what that means is that when the economy begins to revive, demand begins to revive, there already be production out there. So, manufacturing might not keep pace. There will be a lag between consumption by households and what manufacturers are producing or what services are being given out. So, if real estate and banking is a significant growth that we've seen in the first quarter of this year, by the time the second quarter comes, maybe the loans have already been given up. Maybe the houses have already been bought and sold and we might not find any demand for that later on. So, what happens then? Manufacturing will drop. Factories will start reducing their production. Manufacturing growth will drop. Services might taper off and that effectively means even consumption of electricity which a large part of which is actually industrial consumption might actually drop. So, these are problems because that means that we'll actually see growth in consumption but a drop in things like manufacturing and investment. And therefore, that suggests that these green shoots that we're seeing might just be an illusion and we might end up with another collapse, another recession in this year as well. Maybe the GDP numbers will show growth because remember there was a collapse last year, right? In the middle of last year, there was a collapse in GDP. So, you might see the next quarter showing a high GDP growth but if 100 drops to 50, even a 25% growth on that 50 is what? Just 12 and a half percent. You just go back to 62 and a half. So, that will look like great growth but it will still not be back to normal. So, effectively we will take a very long time to return to where we were in the pre-COVID period. That's the reality of the Indian economy and the only way to come out of it is to boost consumption demand and that only the government can do. The government has been sitting on it. It should have been done yesterday but it's still not very late to do it today and tomorrow.