India’s Worst Growth Performance: GDP To Contract 15-25% In June Quarter

The year-on-year GDP contraction during the June quarter is estimated to be nearly around 15-25%. If the estimated growth data matches the statistical figures, India will see its worst growth performance since the country started reporting quarterly GDP data in 1996.

The estimated GDP growth data accounts for April, May and June – when a mandatory lockdown was imposed nationwide due to the corona virus pandemic. Prime Minister Narendra Modi announced the nationwide lockdown on March 24 2020, for 21 days, which was followed by another for 19 days.The economy has suffered the most during the June quarter as a consequence of the lockdown.

Image Source: The Indian Express

Sectors like manufacturing, construction, trade, hotels, transport, which together estimate for almost 45% of the country’s GDP, were hit hard by the lockdown and are yet to retore their losses. Experts believe the fall in these sectors will reflect in the GDP numbers.

Soumya Kanti Ghosh, Group Chief Economic Adviser at the State Bank of India said, “As per our estimates, Q1 FY21 Real GDP de-growth would now be around -16.5 per cent”. He added that the situation has improved over the last month as many corporates had recorded better financial results than they anticipated.

“Manufacturing is likely to witness the sharpest slowdown, followed by services based on high-frequency indicators. On the other hand, the only support to growth is likely to come from the agricultural sector that was relatively insulated from the impact of the virus. We estimate that the contraction in GDP would be close to 25% if we exclude agricultural activity in Q1 FY2021,” he stated.

Former Chief Statistician of India Pronab Sen has predicted the de-growth estimate for April-June to be around -20%.On the other hand, Barclays’ projection has reported that the Indian economy would contract 25.5 per cent in April-June. Reserve Bank of India (RBI) is also assuming that the GDP growth for the year will be negative, but it has shielded away from sharing any estimates.