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India’s GDP declines sharply by 23.9% for Q1 in FY 2020-21; worst contraction on record

As per the National Statistical Office, Gross Value Added (GVA) came in at -22.8 per cent.

SNS | New Delhi |

In a major set-back for the declining Indian economy, the country’s gross domestic product (GDP) has contracted 23.9 per cent in the April-June quarter (Q1), the official data said.

This is the worst incident of the negative economy in India since 1996.

As per the National Statistical Office, Gross Value Added (GVA) came in at -22.8 per cent.

One of the reasons for the decline is the impact of coronavirus pandemic induced lockdown for more than two months. Even after the lockdown was over, the unlocking was done in phases and with restrictions leaving not much room for the economy to attain pace.

The government had shot a stimulus of Rs 21 lakh crore in the economy in the month of May to give some relief to the MSME, Agriculture and other sectors to overcome the losses due to the lockdown.

As per the economists surveyed by Bloomberg, it has expected contraction in the June quarter to be in the range of 15-25.9 per cent, with a median estimate of 19.2 per cent.

The poll further said that challenges related to other underlying macroeconomic indicators such as industrial production and consumer inflation will also have implications on these estimates.

However, the Indian economy was facing crisis even before the pandemic gripped the nation as many international organisations have projected the growth rate around 4.5%, which is not an appreciated figure.

The World Bank had projected the contraction of 3.2 per cent, the International Monetary Fund at 4.5 per cent and the Asian Development Bank at 4 per cent.

Last month, the Finance Ministry in a report had said that as predicted by the IMF, India’s GDP will contract 4.5 per cent in the current fiscal year due to the impact of coronavirus.

The Finance Ministry’s economic report for June came days after the government declared Unlock 2.0.

“The uncertainty caused by the absence of a vaccine against the coronavirus pandemic poses a serious challenge to the economy, the Department of Economic Affairs (DEA) said in its macroeconomic report.