India GDP Records Worst Historic Contraction of 23.9% in April-June Quarter
Though largely along the lines of market expectations, this contraction is the biggest ever on record and the first contraction since the government started releasing quarterly GDP numbers in FY 1997-98
As a result of the Covid-19 induced lockdowns, Indian economy shrank by a massive 23.9 per cent in the April-June quarter of FY 2020-21, as per data from Ministry of Statistics and Programme Implementation (MOSPI) released on Monday.
Though largely along the lines of market expectations, this contraction is the biggest ever on record and the first contraction since the government started releasing quarterly GDP numbers in FY 1997-98.
Further, in terms of gross value added (GVA), GDP plummeted 22.8 per cent from the last year.
“Quarterly GVA at Basic Price at Constant (2011-12) Prices for Q1 of 2020-21 is estimated at INR 25.53 lakh crore, as against INR 33.08 lakh crore in Q1 of 2019-20, showing a contraction of 22.8 per cent,” MOSPI stated.
India’s GDP growth rate has been consistently dropping in the last few quarters, only to be pushed into a free fall by Covid-19 pandemic.
India's Falling GDP Growth Over the Past Few Quarters
Construction, Hotels and Manufacturing Among Worst Hit
Looking at the sector-wise breakup, construction industry is the worst hit having recorded a massive contraction of 50.3 per cent. After construction, hotels and transportation recorded second biggest fall of 47 per cent, followed by manufacturing contracting by 39.3 per cent.
The lockdown restrictions through March and April not only halted economic activities, but also impacted the government’s data collection mechanisms. “In these circumstances, the usual data sources were substituted by alternatives like GST, interactions with professional bodies etc. and which were clearly limited,” MOSPI said in its official statement.
Challenges in data collection of other macro-economic indicators, such as Index of Industrial Production (IIP) and Consumer Price Index (CPI), will also impact these GDP estimates. Therefore, estimates are likely to undergo revisions for the aforesaid causes in due course, MOSPI said.