Business Desk, ETV Bharat: India is bracing for possibly the sharpest contraction the economy may have ever seen when the Central Statistics Office (CSO) releases its gross domestic product (GDP) data for the first quarter ended June 2020 at 5.30 pm on Monday.
The forthcoming GDP figures are expected to be the first full statistical reflection of the adverse impact of the coronavirus pandemic on the Indian economy.
According to various estimates by banking and research agencies, India’s GDP is expected to see a growth (or rather contraction) rate in the range of -15% to -20% in the April-June quarter compared with a year ago period.
Interestingly, if that happens, this would be the first contraction seen by the Indian economy since the drought year of 1979 when GDP growth rate had hit an all-time low of -5.2%.
To recall, even before coronavirus, India’s GDP had grown by a tepid 3.1% in the January-March quarter of 2019-20. For full fiscal 2019-20, growth rate stood at an 11-year low of 4.2%. Things took a turn for worse when economic activity came to a complete halt after a national lockdown was imposed on 25 March 2020.
According to State Bank of India’s (SBI’s) research report Ecowrap released in mid-August, India’s GDP is expected to contract 16.5% during the first quarter of the current fiscal year.
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Earlier in May, Ecowrap had estimated Q1 FY21 GDP contraction at over 20%, but it later revised its estimates, expecting a lower contraction of 16.5% due to better-than-expected corporate earnings growth. The research report said that revenue degrowth of some listed financial and non-financial companies in Q1 FY21 was not as bad as was expected.
Japanese brokerage firm Nomura also expects India to see its lowest point of GDP expansion this year during the June quarter at -15.2%.
Nomura said India is not expected to see positive growth in any of the four quarters of the ongoing fiscal year, resulting in -6.1% growth rate for FY21.
Besides ratings agencies, India’s industry body Ficci also said in July that its Economic Outlook Survey has projected the country’s annual median GDP growth for 2020-21 at -4.5%.
As per the survey, the quarterly median forecasts indicate GDP growth to contract by -14.2% in the first quarter of 2020-21, with a minimum estimate of -25% and a maximum estimate of -7.4% for the quarter.
Notably, India’s index of industrial production (IIP) had contracted by 16.6% year-on-year in June compared to 33.8% in May and a record 57.6% in April. Taking these figures into account, it looks likely that the scary GDP forecasts may turn into a harsh reality.
