According to the data released on Friday by the Union Ministry of Statistics and Program Implementation (Mospi), India’s GDP (gross domestic product) shrank by 7.5% in the quarter ending September compared to the same period last year.
In the April-June quarter, India’s gross domestic product fell by 23.9%, the worst period in decades due to the COVID-19 pandemic, which hit the country’s businesses and livelihoods.
Analysts said that they considered a significant advancement from the massive 23.9% contraction seen in the gross domestic product numbers for the quarter ending June. The internal model of the Reserve Bank of India (RBI) predicts a GDP contraction of 8.6% in the September quarter.
A recent research report by the chief economist of HSBC Securities and Capital Markets India, Pranjul Bhandari, predicts that this contraction is expected to be 7.9%. Economists in a Reuters poll had predicted that gross domestic product would shrink by 8.8%, a contraction that still equivalent to a technical recession.
The economy grew by 3.1% in the January-March quarter, the slowest rate in at least eight years. The GDP data showed that consumer spending slowed in the March quarter, and private investments and exports contracted.
Earlier data showed that India’s GDP growth had slowed even before coronavirus triggered the lockdown restrictions.
The growth rate in the fourth quarter of FY20 was 3.1%, which was the weakest point in the new data series that began in 2012-2013. The real GDP growth rate of FY20 is 4.2%, which is also the weakest in the series.
Due to global trade frictions, declining consumer demand, and government spending, India’s economy grew at the lowest rate since 2013 from April to June last year, which increased the chances of the central bank’s further rate cuts at the next meeting.
Asia’s third-largest economy grew by only 5.0% year-on-year, and it grew by 8% in the same quarter of 2018 and grew by 5.8% in the previous quarter.
Due to the Covid-19 pandemic, the global economy is shrinking badly. More worrisome is that this deadly virus is fast spreading to rural and remote areas of the nation that lack testing, treatment, and tracing infrastructure.
Prime Minister Narendra Modi imposed a nationwide lockdown on March 24, 2020, which lasted until May 31. Unlike other countries such as Italy, Germany, and Thailand, the lockdown in India did not help contain the spread of the COVID-19. Coronavirus infection cases kept on increasing despite India being in lockdown.
In India, the abrupt nationwide lockdown was the world’s largest lockdown, forcing 1.3 billion Indians to stay indoors. The lockdown restrictions were enforced by the Modi Government without any preparation or coordination with states.
Except for some basic activities and essential services, the rest of India’s $2.9 trillion economies remained shuttered during the lockdown period. Economic activities in the country have stagnated. The lockdown had devastating impacts on the already declining economy, and people’s livelihoods as restaurants, factories, shops, transportation services, other services, and commercial establishments were shuttered.