New Delhi, Aug 31 (IANS) The Covid-19 pandemic-induced economic turbulence along with measures to curb its outbreak, heavily dented India’s economy and plunged the country’s GDP to (-) 23.9 per cent during the first quarter (Q1) ended June 2020-21 on a year-on-year basis.
According to the National Statistical Office (NSO), the GDP at ‘Constant (2011-12) Prices’ in Q1 of 2020-21 is estimated at Rs 26.90 lakh crore, as against Rs 35.35 lakh crore in Q1 of 2019-20, showing a decline of 23.9 per cent.
In financial parlance, a GDP contraction not only indicates the economy’s movement towards a recession, but also underlines the reduction in purchasing power along with lower taxes for the government, higher defaults on debt and falling Capex spends.
Though not comparable, the Gross Domestic Product (GDP) had grown by 5.2 per cent in the corresponding quarter of FY2019-20.
In the quarter just preceding Q1FY21, the economic growth was at 3.1 per cent.
The country had observed mobility restrictions as mandated under the lockdown measures for the better part of the first quarter of FY21.
It was only on June 1 that partial unlock measures were implemented.
However, a contraction at this scale is unprecedented and never been witnessed since the current practice of quarterly series data dissemination began in the late 1990s.
“As the world economic outlook has highlighted, the fraction of countries, where GDP per capita would decrease is the highest since 1870, so once in a one and a half century event, which is what we are going through,” said Chief Economic Adviser to the Government Krishnamurthy Subramanian, commenting on the Q1FY21 GDP data.
“India was also in a ‘lockdown’ all through the April-June quarter with the majority of economic activities being restricted, so this trend is along the expected lines.”
In a poll of economists, IANS on August 29, had predicted that the economic impact of Covid-19 on India’s GDP is expected to be anywhere between 17 and 30 per cent during Q1FY21.
“GDP at constant (2011-12) prices in Q1 of 2020-21 is estimated at Rs 26.90 lakh crore, as against Rs 35.35 lakh crore in Q1 of 2019-20, showing a contraction of 23.9 per cent as compared to 5.2 per cent growth in Q1 2019-20,” the NSO said in the Q1FY21 GDP estimates of 2020-21.
“Quarterly GVA at basic price at constant (2011-12) prices for Q1 of 2020-21 is estimated at Rs 25.53 lakh crore, as against Rs 33.08 lakh crore in Q1 of 2019-20, showing a contraction of 22.8 per cent.”
The GVA includes taxes, but excludes subsidies.
On a YoY basis, Q1 GVA for 2020-21 from the agriculture, forestry and fishing sector showed a growth of 3.4 per cent, against 3 per cent in the same quarter of 2019-20.
Nevertheless, the GVA in Q1 2020-21 from the manufacturing sector grew de-grew (-) 39.3 per cent, as compared to a growth of 3 per cent in the corresponding quarter of the previous fiscal.
Similarly, the mining and quarrying sector declined by (-) 23.3 per cent against previous year’s growth rate of 4.7 per cent.
“With a view to contain spread of the Covid-19 pandemic, restrictions were imposed on the economic activities not deemed essential, as also on the movement of people from 25 March, 2020. Though the restrictions have been gradually lifted, there has been an impact on the economic activities as well as on the data collection mechanisms,” the NSO said.
“The timelines for filing statutory returns were also extended by most regulatory bodies. In these circumstances, the usual data sources were substituted by alternatives like GST, interactions with professional bodies etc. and which were clearly limited.”
As per the NSO statement, the data challenges in the case of other underlying macro-economic indicators like IIP and CPI, used in the estimation of ‘National Accounts’ aggregates, will also have implications on these estimates.