New Delhi: Owing to a strict nationwide lockdown due to the novel coronavirus (COVID-19) during the bulk of the first quarter of the financial year 2020-21, India’s Gross Domestic Product (GDP) for the April-June quarter (Q1) slipped by a sharp 23.9 per cent, as per provisional estimates released by Ministry of Statistics and Programme Implementation (MoSPI) on Monday.
The GDP had expanded by 5.2 percent in the corresponding quarter of 2019-20.
According to the economists surveyed by Bloomberg, India’s GDP has declined 18 percent in the quarter ended June. Earlier, the State Bank of India Ecowrap report said India’s GDP to contract by 16.5 percent during the first quarter.
The worst contraction in the history of Indian economy
The June quarter GDP data is the worst contraction in the history of the Indian economy mainly because the central government on March 25 had ordered a complete lockdown of most of the manufacturing and service sectors owing to the spread of COVID-19. Only essential services were allowed during this period as the country tried to curb the spread of the virus.
The GDP for the preceding January-March quarter (Q4) of 2019-20 had witnessed a growth of 3.1 percent.
Government data says, the gross value added at basic price at constant terms during the June quarter shrunk 22.8 percent. The GVA at Basic Price at Current Prices slipped 20.6 per cent in Q1 2020-21.
As per the National Statistical Office (NSO) data, all key sectors, except agriculture witnessed contractions. For instance, construction witnesses a drop of 50.3 percent, while the manufacturing industry saw a 39.3 percent fall. Apart from these two industries, electricity, gas, water supply and other utility services slipped 7 percent. Trade, hotels, transport, communication and services related to broadcasting contracted 47.0 percent.
Only the agriculture, forestry and fishing industry witnessed a growth of 3.4 percent in the June quarter, the data showed.
Chidambaram hits out at Centre over GDP data
Former union finance minister P Chidambaram hits out the BJP-led central government and termed the GDP numbers an “economic tragedy”. He said the “country was paying a heavy price” for the “nonchalant and uncaring” attitude of the Modi government.
“GDP in the first quarter has declined by a whopping 23.9 per cent. That is, about one quarter of the gross domestic output as on 30-6-2019 has been wiped out in 12 months. In other words, since the end of 2019-20, the gross domestic output has fallen by about 20 percent,” Chidambaram said.
“The only sector that has grown is Agriculture, Forestry and Fishing at 3.4 percent. The Finance Minister who blamed an ‘Act of God’ for the economic decline should thank the farmers. And she should also be grateful to the gods who blessed the farmers,” he added.