 Hello and let's talk about the GDP. The provisional GDP growth numbers for the last quarter of the previous year and for the entire year that's 2019-2020 are out and they do not look good. We are under a government which has set ambitious targets for growth in the coming years. But by the looks of it, we are nowhere close to meeting these targets. And mind you, this has nothing to do with the pandemic. To channel Rahul Gandhi, the ship was sinking long before we hit the COVID-19 pandemic. How did this happen and who's responsible? We'll talk a bit about this, but first hear us in numbers. The National Statistical Office released the GDP data on Friday. It shows that growth for the January to March quarter of 2020 slowed to 3.1%. This is the lowest in 40 quarters. The GDP growth for the year is pegged at 4.2%. This is a 11-year low. In 2018-19, the GDP grew at 6.1%. The fiscal deficit has been estimated to be around 4.8% as opposed to the budget calculation of 3.8%. A number of sectors saw poor growth or even negative growth. For instance, manufacturing shrunk by 1.4% this quarter. Meanwhile, the pandemic in India continues to claim lives. Today morning's numbers show that there were 8,392 cases in the last 24 hours with 230 deaths. This is even as many parts of the country of further loosening restrictions. Now, many supporters of the government are citing the pandemic as the reason for all our economic woes. But is this the case? We talked to senior journalist Anandya Chakravarty to find out. Anandya, so the GDP growth numbers are out. These are provisional numbers both for the last quarter of the year as well as for the whole financial year 2019-20. And it's much lower than what the government claimed it would be. Now, supporters of the government are saying that this is all because of the lockdown and otherwise we were completely on track, the economy was doing great. So, how would you respond to that? You know, it is true that the lockdown makes a difference to the last few days. If you say that the last seven days were gone, which means that you effectively had 84 days instead of 91 days in the last quarter, which is January to March. So, if one assumes that half the output got affected in the last seven days, so one can say that three and a half days were lost, right? Now, if you adjust for that, then you'll see that the growth rate comes to something like 5.2%. And that is what a lot of the government spin doctors and all the mainstream media channel experts and anchors are saying 5.2%. It would have been 5.2% had it not been for the lockdown. Now, of course, that is because you're comparing a provisional estimate to the government's revised estimate for last year, right? It's very simple. Like, if you say that, oh, I have, I'm going to get, you know, if your child says that I'm going to improve my marks in maths by at least 20%, right? So, I got 20 out of 50, I'll get 24. That's what you expect, right? Now, the next thing you hear is that actually that person, your child got 22 but says that he increased it by more than 20%. Why? Because his last first-term exam results were actually revised and it turned out he didn't get 20 out of 50, he had got 18 out of 50. That is what the government has done because the revised estimate for last year has been lowered. So ideally, and we have experience of how this government actually, the first provisional estimates are always roseier than what it ultimately turns out to be. This we've seen year after year. We've seen in every single kind of data. So in fiscal deficit data, we know they said 3.8%. Now it's been revised to 4.6, 4.8%, right? It might turn out to be even higher. All of the quarterly data when it is first published. For instance, the first quarter data for 2019-20 was published in August. The second quarter was published in November and so on, third quarter in January. All of them have been revised downwards as we move forward. So I'm saying let's compare provisional estimate to provisional estimate, right? Correct. And then at the three and a half days loss, then the growth actually goes up from 4.2% that we're saying, but only to 4.5%. It's nowhere close to the 5.2% that the spin doctors are telling you. So, therefore, those last seven days really didn't matter much. Maybe a 0.3, 0.4% difference. The truth is, even if the last four days did matter completely, 5.2% is terrible, right? This is a government which told you we are going to get you to 10-digit, I mean double-digit growth. Basically, this is a government which tells you that we are going to achieve $5 trillion GDP by 2024. And at that time, it required a nominal growth, as in today's prices, where you remove inflation and you get real GDP growth. At that time, it required about 14-15% growth in nominal terms. Today, we've got a nominal growth of 7%. You adjust for the last week loss, what will it be? 8%. So it's still far away from what this government has promised. So it is clear that the Modi government is a complete disaster when it comes to the economy. We used to think that UPA2 is bad or UPA is bad. This is much, much worse. So, could you talk a bit about what are the key sectors that are... What is the situation of the key sectors, especially what do the numbers say about that? So, you know, we know what's happening in manufacturing. We know what's happening to past sales. We know all that. Everyone anticipated it's going to be terrible, but I don't know whether anyone thought it's going to be 0.03%. I don't recall the last time such a thing had happened. Okay, maybe the shutdown in the last seven days affected it and maybe it would have been 1%, 1.2%, 0.5%, whatever. It is terrible. What are the places which affect employment? Construction, we know it's been affected for the last couple of years. In construction, growth has been extremely poor. It's just 1.3%. That's a terrible growth in a country like India, which should be spending more on construction. It is the biggest employer outside agriculture. The places where the middle class is employed. Now, which are those? If I look at it, I would say that essentially it's finance, real estate, trade, then broadcast services like you and me. You look at things like transport, hotels. This is where the middle class finds more and professional services. The statistics department calls professional services. These are outside the government services. These are outside government services. Government services, of course, has about, if you look at it, central government services. Approximately, state government together would probably be employing approximately 1 crore and you would take into account the people getting pensions and all that. You take that out to about 1.5 crore. The remaining lot, the middle class, is effectively that 1.5 crore. I'm assuming at least 1 crore out of that are actually not middle class. There will be lower middle class people or even below the middle class. So, if I look at where the middle class is, 4.1% real growth. That is a terrible real growth in these segments. Overall, we are seeing a terrible, terrible situation except where the government is spending, which is public administration, defense and other services, which comes largely in the government's domain when we look at the gross value added. And when we look at it from the GDP, which is expenditure side, then as I said, government final consumption expenditure, that has grown 11.8%. So, public administration and all that has grown 10% and government final consumption expenditure has grown 11.8%. So, the government of India actually is spending. And we can see that from the fact that whatever fake numbers it puts in the budget papers, the fiscal deficit turns out to be much larger. But it's doing it badly because ideally if it is spending that much money, it needs to target it properly so that people are, so that the economy gets kick started. Clearly, it's a team of amateurs. It's a team who run an ad hoc system. They don't understand how the economy works. And that is why we're seeing such terrible results from government spending. Right. So, what you're also saying is that spending does not necessarily lead to people having more money in their pockets and being in a position to spend. So, I would say that this government has been spending right from the beginning. The Modi government has been focusing its spending on the poorest of the poor, which is a good thing. But it's not to create employment. It focuses on giving dole, which is broadly what the Congress and the BJP both agree on that give dole so that capitalism can survive basically. In terms of votes, bang for the buck. If 30% of rural India in terms of households survives on less than 4,000 rupees household income. So, obviously, it's best to target your spending to these places to get the maximum votes. You want to give money to the middle class. You'll have to spend much more. So, the government has no spending targeted towards creating jobs, creating investment. All its spending is to sustain this basic subsistence level existence for the poor. And that is where most of the money is going. And that is where they're spending. But that does not kickstart a virtuous cycle for the economy where demand is constrained. Because the poorest of the poor, frankly, they spend just on food and some basic necessities. If you have to sustain FMCG, if you have to sustain Durables, or you need to completely change the way in which your priorities of production are, which I doubt that this government is ever going to do. So, it is spending, but it is spending badly. And it is spending to sustain the poor at their level of subsistence, not to make their lives better, because it does help you fetch votes. So, there's one more point Prashant. Where is the government getting the money? Of course, it's expanding its fiscal deficit without telling us that it's doing it. Some of that is on the FCI's books which is loaded with loans because it's providing food, which is not being given to it. But it is also interesting that in an economy which has been doing badly for several years now, what would one expect? That the government expands its fiscal deficit, puts money in the hands of consumers and entrepreneurs. Because ultimately, this government, we're not expecting it to be socialist because it's a wildly pro-market, pro-capital government. That's what it came into power being. So, it's not as if you and I support socialism. The government has to follow that because they did not get that mandate. So, look at it. What is happening when it comes to putting money in the people's hands? It's not happening. In terms of money, in terms of tax as a percentage of GDP, that is actually increased in a year where we are seeing GDP growth so forth. We would have thought that the government is going to hand out more money, reduce taxes, or take taxes from the rich. We know that income taxes or direct income taxes are, if you take it, is more or less at the same percentage of GDP. It's not increased. If anything, it is probably reduced. So, the tax as a percentage of GDP is increasing. Most of it is coming from GST and indirect taxes like taxes on fuel. And the interesting thing is that the government is taking it from everyone, spending more on a small segment. So, I would say that at least the spending classes are very badly off in this government. So, I mean, you can say that, okay, who cares about the spending classes? They've been making a lot of money. Think of the 60, 70% poor. That is true. The economy cannot overnight be restarted or completely changed. You have to do it slowly and that part which spends, that part which invests, that has been very badly hit and the numbers are very clear. Absolutely. And like you pointed out in one of the articles you wrote, none of the major industrialists, the capitalist class, so to speak, they've completely been silent on this too. Completely silent. They're completely silent. And remember what happened from 2013? Every day there would be a statement about, oh, this policy paralysis and this is terrible. And from, I think in 2012 or something, we heard some of the captains of industry go to Gujarat and say we want more. Mr. Modi as Prime Minister, CEO of India. So, we've been hearing that the corporate India Inc, India's captains of industries are very, very vocal during the UPA when the economy was mismanaged. Right now, they're absolutely silent. If anything, you'll find they're saying, fantastic. The government's done brilliant. We will be Atman in work and all that kind of rhetoric. Two or three big businesses are doing well under this government. Everyone else is doing badly. Whether they admit it or not, for whatever reason, they're silent. They should speak up. They should speak up for themselves if not for anyone else. Thank you so much for talking to us. That's all we have in this episode of Let's Talk. We'll be back tomorrow with the latest news developments of the day. Until then, keep watching NewsClick.