A clear picture of the quantum of damage will emerge by today evening, when the government reveals the Q1 GDP and growth figures.
Key economic indicators nosedived to record lows as India saw an unprecedented nationwide lockdown in the first quarter of the current fiscal, possibly leading to first GDP contraction in the last 40 years. However, a clear picture of the quantum of damage will emerge by today evening, when the government reveals the Q1 GDP and growth figures. The latest data will also clarify two major aspects — how much cushion has been provided by the agriculture sector, and the severity of the contraction in the manufacturing sector. Amid the weak demand, today’s data will also paint the true picture of India’s household consumption and expenditure.
It is to be noted that after hitting an annual growth of 8.2 per cent in Q4 FY18, the GDP of India is almost on a downward trajectory so far. Q4 of FY19 was the only exception when the GDP increased by 0.1 per cent from the previous quarter. In Q4 FY20, Indian clocked a GDP growth of a mere 3.1 per cent.
What do economists say?
Aditi Nayar, Principal Economist, ICRA, said that Indian GDP has contracted by about 25 per cent in Q1 FY21. However, the SBI’s Ecowrap report raised its estimates for Q1 GDP growth from a contraction of 20 per cent to 16.5 per cent. Also, the Bloomberg poll suggested that Q1 GDP may contract by 19.2 per cent, and the economists at Care Ratings pegged it at a contraction of 20 per cent.
Further, the GDP growth in the consequent quarters of the fiscal is not expected to offset the loss of the first quarter. The economists at Barclays downgraded the annual GDP forecasts to a contraction of 6 per cent on-year. The Reserve Bank of India also said that real GDP growth is expected to be negative in the current fiscal.
Meanwhile, following the dire consequences of the disruptions caused by the coronavirus pandemic, Prime Minister Narendra Modi rolled out the ‘Atma Nirbhar Bharat’ package, worth Rs 21 lakh crore to save the sinking economy.