India economy contracts by 23.9% in the first quarter

<p style="font-weight: 400;">India is officially in recession as its economy contracted by 23.9 per cent in the first quarter of the current financial year, owing to the coronavirus pandemic and the subsequent nationwide lockdown for over two months from March 25.</p>
<p style="font-weight: 400;">The data released Monday by the National Statistical Office (NSO) is the worst since 1996, when India started reporting its quarterly numbers.</p>
<p style="font-weight: 400;">Official data showed that the gross domestic product (GDP) had started to decelerate even before the lockdown. In the January-March quarter of previous financial year, GDP growth stood at 3.1 per cent. GDP growth in the corresponding quarter in 2019-20 was 5.2 per cent.</p>
<p style="font-weight: 400;">The contraction in the economy is set to run through the July-September quarter of the current financial year as well.</p>
<p style="font-weight: 400;">Finance Minister Nirmala Sitharaman in May announced a Rs 20 lakh crore stimulus package to boost the sagging economy. However, industry captains said that only a minuscule portion of this sum has actually been directed towards the economy.</p>
<p style="font-weight: 400;">The manufacturing sector declined by 39.3 per cent; trade and hotels showed a contraction of 47 per cent. Barring the agriculture sector, which registered a 3.4 per cent growth, all other industries showed a contraction.</p>
<p style="font-weight: 400;">“Real GDP growth was much lower than what markets were expecting. The fine print indicates that the trough in the economy was much lower than expected and the pickup will likely be more elongated. Production side was pulled down by deep contraction in manufacturing, construction, and trade, hotel, transport sectors while the expenditure side was clearly pushed lower by heavy contraction both in consumption and investment,” Suvodeep Rakshit, vice-president & senior economist, Kotak Institutional Equities, said in a statement.</p>
<p style="font-weight: 400;">Rakshit added that the growth recovery will be gradual; contraction will be for all quarters of the current fiscal. “Growth recovery will also be hinged to the curb of the Covid spread and removal of even localized lockdowns,” he said.</p>
<p style="font-weight: 400;">Assocham secretary general Deepak Sood called for injecting urgent booster steps to revive demand, adding that merely removing supply-side constrains will not help until demand picks up.</p>
<p style="font-weight: 400;">Industry and business chambers have sought immediate intervention from the government to boost demand and consumption.</p>.