Under COVID attack, Indian economy contracts by 23.9%

Following the global trend, India’s economic growth nose-dived with the gross domestic product (GDP) falling by 23.9 per cent in April-June period quarter amid coronavirus pandemic crisis, according to data released by the National Statistical Office (NSO) on Monday.

The data released by NSO, which comes under the Ministry of Statistics and Programme Implementation (MoSPI), is vital as it will provide the first benchmark on the state of India’s economy after the pandemic.

In the January-March quarter, India’s economy had grown at 3.1 per cent — its slowest pace in at least eight years. Consumer spending had slowed down, investments and exports were contracting well before the March lockdown was announced. The FY20 real GDP growth is 4.2 per cent, which is also the weakest in the series.

Experts aren’t surprised with the quarterly results because the 68-day lockdown, which started on March 25, was definitely going to contract the growth.

This is the slowest Indian economy has grown since 2013 as consumer demand and government spending slowed amid global trade frictions, raising chances of the central bank cutting interest rates further at its next meeting.

The output of eight core infrastructure sectors dropped by 9.6 per cent in July due to a decline in the production of steel, refinery products and cement, PTI reported. In contrast, the production of eight core sectors had expanded by 2.6 per cent in July 2019.

Except fertiliser, all seven sectors — coal, crude oil, natural gas, refinery products, steel, cement and electricity — recorded negative growth in July this year.

India, which is Asia’s third-largest economy, expanded just 5.0 per cent year on year, it grew 8 per cent in the same quarter of 2018, and 5.8 per cent in the previous quarter.

The global scenario is no different. The International Monetary Fund (IMF) has estimated a global contraction of 4.9 per cent in 2020. The United Kingdom’s (UK) economy has reported a 21.7 per cent year-on-year plunge in the June quarter.