Indian government announced the country’s biggest economic contraction in 24 years.
Is India on the path Economic Recession ?, The National Statistical Office (NSO) has put out the GDP figures for the first quarter (April-June) of fiscal year 2020-2021.
The Indian economy has been contracted by 23.9%. This is the worst quarterly growth since Central Statistical Organisation (CSO) began publishing quarterly GDP numbers i.e. from 1996.
This shrank of 23.9% year-on-year in the first quarter of 2020-2021 is much worse than market forecasts of 18.3% drop.
It is the biggest contraction on record, as India imposed a coronavirus lockdown in late March and extended it several times, halting most economic activities.
Still, India remains the third worst-affected country in the world by the pandemic after United States and Brazil.
Barring agriculture which witnessed a growth of 3.4%every other sector contracted. Here is the complete table.
|Industry||GVA Growth At Constant Prices (Year-On-Year)|
|April-June 2020||January-March 2020||April-June 2019|
|Agriculture, forestry and fishing||3.4%||5.9%||3%|
|Mining and quarrying||-23.3%||5.2%||4.7%|
|Electricity, gas, water supply and other utility services||-7%||4.5%||8.8%|
|Trade, hotels, transport, communications and services related to broadcasting||-47%||2.6%||3.5%|
|Financial, real estate and professional services||-5.3%||2.4%||6%|
|Public administration, defence and other services||-10.3%||10.1%||7.7%|
|(Source: Ministry of Statistics)|
The poor show of the economy was very much expected given the scale of the disruption since last week of March 2020.
The debate in any case was about extent of contraction and most surprising part is we ended up far worse than Britain which recorded 20.4% contraction and many other emerging markets.
While China, which many believe to be the epicenter of the Covid-19 outbreak, announced a surprise 3.2 per cent growth in its GDP during this quarter.
India’s fiscal deficit crossed the annual target for 2020-21, just four months into the fiscal year, government data showed on Monday.
According to the data:-
- The fiscal deficit at the end of July 2020 stood at ₹ 8.21 lakh crore, i.e. 103.1 per cent of the budgeted target for this financial year.
- Net tax receipts came at ₹ 2.03 lakh crore
- Expenditure was ₹ 10.05 lakh crore.
Economists quoted by news agency Reuters have predicted fiscal deficit to cross 7.5 per cent of the GDP in 2020-21, as against the government’s budgeted estimate of 3.5 per cent.
On the top of the above RBI in its annual report which was published last week has warned the government that uptick in economic activity visible in May and June appears to have lost strength in July and August, suggesting contraction in economic activity will continue in Q2. If it happens India will officially entered into economic recession.
More details can be read here: GDP collapses 23.9% in Q1, worst among big economies