With COVID-19 having a choking hold on the economy, India’s GDP shrank by nearly 24%, the lowest in 24 years. As per the data released by the National Statistical Office (NSO), India’s GDP dropped by a massive 23.9% for the April-June, that is the first quarter of FY2020-21.
GDP at Constant (2011-12) Prices in Q1 of 2020-21 is estimated at Rs. 26.90 lakh crore, as against Rs. 35.35 lakh crore in Q1 of 2019-20, showing a contraction of 23.9% as compared to 5.2 per cent growth in Q1 2019-20, the data shows. Manufacturing, construction and trade sectors reported massive slumps of 39.3%, 50.3% and 47% respectively. While the agriculture sector, riding high on a good monsoon season and robust Kharif sowing and rabi production, reported a positive growth of 3.4%.
Suvodeep Rakshit, Vice President and Senior Economist at Kotak Institutional Equities, said the real GDP growth at minus 23.9% in 1QFY21 was much lower than what markets were expecting. He said the trough in the economy was much lower than expected and the pickup will likely be more elongated. Rakshit pointed out that the production side was pulled down by a deep contraction in manufacturing, construction and trade, hotel, transport sectors. In contrast, the expenditure side was pushed lower by massive contraction both in consumption and investment. Dharmakirti Joshi, the chief economist at Crisil, told the Washington Post that the pandemic changed everything. He said India’s economy is getting disproportionately hit.
Experts say the massive shrink reflects on India’s nationwide lockdown, which was one of the strictest in the world, taking a toll on the nation’s economy. Over 100 million people lost their jobs or left the labour force. Now, with restrictions easing and businesses trying to adapt the new normal, measures of economic activity remain low.
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