GDP at lowest in last 40 years | Govt. says Global pandemic to blame

GDP at lowest in last 40 years | Govt. says Global pandemic to blame

It was widely expected, India’s GDP fell sharply during the lock-in quarter and fell 23.9% year-on-year from April to June. India's GDP fell more than expected in the first quarter. 

Bloomberg's survey of economists showed that India's GDP fell 19.2% year-on-year in the first quarter. The coronavirus pandemic has caused unprecedented closures of stores, markets, industries, and almost all economic sectors in April and May. After relaxing the restricted zone restrictions, green buds of revival did not begin to appear until June. 


     “The GDP data released, clearly shows the severity of India's economic crisis. India's GDP has shrunk for the first time in the past 40 years.”


India’s GDP for the April-June quarter contracted by 23.9% year-on-year, which was the first GDP contraction in more than 40 years. According to the National Statistical Office (NSO), the gross value added (GVA) is -22.8%.

The mining industry contracted by 23.3% in the first quarter, compared with 4.7% in the same period last year, and the manufacturing growth rate in the first quarter was 39.3%, compared with 3% in the same period last year. The agricultural growth rate was 3.4%, compared with 3% in the same period last year, and the construction industry growth rate was 50.2%, compared with 5.2% in the same period last year.

Gross fixed capital formation fell by 47% year-on-year, while government final consumption expenditure increased by 16% year-on-year.


Affected areas

  • Trade, hotel, transportation and communications industries fell by 47%
  • The manufacturing industry shrank by 39.3%, while the construction industry suffered a 50.3% hit
  • Mining production is still struggling at 23.3%, while electricity and natural gas are down by 7%
  • The only bright spot is agriculture, with a growth rate of 3.4%


"The Reserve Bank of India (RBI) will not lose too much sleep as expected. The Reserve Bank of India (RBI) will still focus on growth. This figure (GDP value) slightly increases the chance of a rate cut in October. In the next time reading, the inflation rate is below 5% and the Bank of India may still postpone the interest rate cut to December,” Rupa Rege Nitsure, chief economist of L&T Financial Holdings Group, told Reuters in comments on the data.

The Indian economy grew 3.1 percent in March and slashed GDP growth in fiscal year 20 to 4.2 percent, the weakest since the global financial crisis. The economy grew by 6.1 percent. In 2019.

India's 2020 GDP estimates have already painted a very bleak picture. The World Bank forecast a decline of 3.2 percent, the International Monetary Fund at 4.5 percent, and the Asian Development Bank at 4 percent. Nomura estimated the increase to be (-) 5.2 percent and the Icra recently revised its forecast for a decline in the current fiscal to 9.5 percent.

The primary sector shrank by 9.6 percent. In July, which means an improvement over the decrease by 12.9%. Reported a month ago as reported on Monday. This is the fifth month of ongoing decline in eight major industries.



Pandemic playing major spoil sport 

The pandemic has deepened India’s economic pain and exacerbated the continued slowdown in the past two fiscal years. Earlier, the annual GDP growth rate in the fourth quarter of fiscal 2018 climbed to 8.2%. Since then, so far, it is almost on a downward trajectory. The only exception was the fourth quarter of FY19, when GDP grew 0.1% from the previous quarter.

At the same time, in the context of severe financial and structural crises in all corners of the society and economy, the Modi government has launched a series of reforms and plans to ease economic disruption.
Under the "Atma Nirbhar Bharat" program, the center introduced Prime Minister's Garib Kalyan Yojana to provide free food to the disadvantaged and poor; MGNREGA provides jobs for migrant workers; Relief; and epoch-making reforms in the agricultural sector. While taking measures to reduce the impact of the virus, India is also accelerating the pace of reducing imports and increasing exports to the global market.


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