It's what we do, not what they say.

"India's April-June quarter GDP contracted a massive 23.9% year-on-year (YoY), the first GDP contraction in more than 40 years. As per the National Statistical Office (NSO), gross value added (GVA) came in at -22.8 percent." Mining was down 23.3%, manufacturing by 39.3%, construction by 50.2% and gross fixed capital formation, which gives an indication of new investment, was down 47%. Agriculture was up 3.4%.  "The index of eight core infrastructure sectors dropped to 9.6% in July from a year ago compared to a 12.9% contraction in June, suggesting industrial production may contract again in July." The slowdown is because of severe coronavirus lockdown, said Chief Economic Adviser KV Subramanian. But the country will see a V-shaped recovery in various sectors. "He said indicators like rail fright traffic and electricity consumption are pointing to a recovery in economic activity." The first quarter contraction was inevitable and has already been discounted by markets, as shown by a modest rise in the Bombay Sensex this morning. More important is whether, and by how much, the economy recovers in the rest of the financial year, to 31 March 2021. Unfortunately, "India's economy may shrink by around 10 percent in the current fiscal due to the impact of the Covid-19 pandemic, experts said." The dreaded D-word "is studiously avoided" at the Reserve Bank (RBI), wrote Rajrishi Singhal. "Among economists, it is shorthand for depression (continuous contraction of economic growth), or for deflation, a state of falling prices." "The RBI annual report for 2019-20 is inexplicably silent on the economic shock from demonetization in late 2016 and the hasty implementation of a flawed goods and services tax (GST) soon thereafter." The RBI advises the government to use "fiscal sops" with money raised by selling railways, ports and steel plants but the private sector is unlikely to invest unless there is demand. "RBI paid Rs 1.76 trillion as dividend to the government after months of bullying and some rather unseemly behavior by bureaucrats, leading to premature resignation of former governor Urjit Patel." "But RBI has asked no pointed questions, nor has it sought any detailed explanation" on what happened to the money. "Lack of fiscal space has kept a lid on treasury spending. Even with only modest rescue outlays, the national deficit and debt burden could overshoot their danger marks," wrote an editorial in the Mint. Present Governor of RBI has ruled out stagflation saying that consumer inflation should moderate. "The recent appreciation of the rupee is working toward imported inflationary pressures," said RBI in a note. According to CEIC the real effective exchange rate (REER) for the rupee was 112.4 in July 2020,with base 2005=100, which means it is overvalued. The RBI is ready to sacrifice exports, which are already reeling from falling orders and high import duties on materials and parts, by increasing prices of our goods due to an overvalued exchange rate. The economy reflects what people do. Regardless of what government lackeys say.