- India’s GDP shrank by the steepest margin ever 23.9% in the April-June period, according to data released by the National Statistical Office on Monday.
- From manufacturing to real estate, from hospitality to mining, all segments except agriculture are in deep red as the economy records the sharpest drop in 41 years.
- This is the sharpest contraction since quarterly figures started being published in 1996 and worse than what was expected by most analysts.
India’s gross domestic product (GDP) fell by 23.9% (from a growth of 5.2% in the same quarter of the last fiscal year) in the April-June period quarter, amid a coronavirus pandemic-induced lockdown which hit businesses and livelihoods across the country, official data released by the National Statistical Office (NSO) showed on Monday.
In the previous last quarter i.e., January-March, India’s economy had grown at 3.1%, its slowest pace in at least eight years. The GDP data had shown that consumer spending slowing, private investments, and exports contracting in the March quarter.
From manufacturing to real estate, from hospitality to mining, all segments except agriculture, in deep red as the economy records the sharpest drop in 41 years. The fall in various sectors, as per the report, is as follows:
- The agriculture sector, thanks to plentiful summer rains this year, has shown a growth of 3.4% from 3% last year.
- The manufacturing sector contracted 39.3% from a growth of 3% last year, while the mining sector shrank by 23.3% from a growth of 4.7% last year.
- The construction sector contracted 50.3% compared to a growth of 5.2% last year as roads and infrastructure projects ground to halt for the most part of April-June 2020-21.
- The real estate sector, which had to stop overnight because areas with large gatherings had to be emptied out, also was severely affected. The sector shrank by 5.3%.
Gross Value Added (GVA), which is GDP minus taxes that experts consider as a more realistic proxy to gauge economic activity, contracted 22.8% in compared to 4.8% growth last year.
If GDP growth falls again in the current quarter (July-September), India would technically be in a recession, an economic state characterized by at least two successive quarters of contraction, underscoring the pandemic’s bludgeoning impact on a country that until not-too-long-ago was the world’s fastest-growing major economy.
Moreover, In the budget for 2020-21, finance minister Nirmala Sitharaman had assumed nominal GDP growth of 10% in 2020-21, and a fiscal deficit of 3.5% of GDP, a goal that looks almost unthinkable to achieve given the rapid turn of events.
The finance minister had asserted that India’s tax revenues will grow by 12% in 2020-21 compared to the previous year.
Given this, Prime Minister Narendra Modi’s vision of making India a $5 trillion economy and a global economic powerhouse by 2024-25 has now become a challenging task.
On the other hand, China’s economy grew by 3.2 percent in April-June after recording a decline of 6.8 percent in January-March 2020.