On 31st Aug, 2020, National
Income data released showing a contraction in India’s GDP for Quarter 1 of F.Y.
2020-21 of 23.9% due to lockdown and COVID 19 disruptions avails.
Here are some of the key
highlights:
Ø 23.9%
contraction in GDP is worst contraction on record in last 41 years.
Ø Q1
GDP shrank from ₹35.35 lakh cr to ₹26.90 lakh cr (YoY).
Ø Contraction
is worst among the G20 nations. Previously, UK reported biggest GDP slump at
21.7%.
Ø Gross
Value added (GVA) which is GDP minus taxes is at -22.8%.
Ø Sectoral
Trends – All sectors except agriculture have contracted
§
Construction sector had the biggest hit contracting
50.3% compared to growth of 5.2% last year.
§
Trade, hotels, transport, communication &
services related to broadcasting contracted 47% compared to 3.5% growth last
year.
§
Manufacturing contracted 39.3%, Mining sector
contracted 23.8% & Financial services sector contracted by 5.3%
§
Agriculture sector grew at 3.4% compared to 3%
in the last year, thanks to favourable monsoon.
Ø Private
consumption fell 26.7%
Ø Investments
contracted 47.1%
Ø Net
exports of goods & services contracted 19.8%.
Ø Government
expenditure contracted by 10.3%
Q1 GDP is the first benchmark on
the state of the economy after the pandemic which is vital. The sharp contraction
is the GDP numbers is the worst contraction in the history of the Indian
economy since Independence. It is mainly due to COVID-19 led lockdown and
disruptions. Closure of business activities during the quarter to cure the
spread of deadly coronavirus affects the economy on a wider scale.
Now, India’s road to recovery seems
long and hard as well. Most economists believe that the de-growth will persist
for at least the next two quarters. FY 2020-21 may close with a negative GDP. Monetary
and Fiscal measures taken by the government have so far fallen short. Millions
have been left jobless and business are also on the edge of bankruptcy.
All hopes are now with the
Government & RBI; what measure & reforms they will take to put the
economy back on track.
Feel free to contact in case of any
query or consultation.
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