India’s economic growth contracted by a shocking 23.9 per cent during the April to June quarter of the current financial year, the worst since the country started reporting the quarterly GDP numbers in 1996. The contraction, owing to a complete nationwide lockdown of over two months, is worse than anticipated.

According to the State Bank of India (SBI), decline in economic growth will be in double digits even in the second quarter. “Our preliminary estimate indicates that all the four quarters of FY21 will exhibit negative real GDP growth and decline of full year growth will likely be in double digits,” SBI’s Ecowrap said. Chief Economic Adviser K.V. Subramanian said yesterday that the contraction was on expected line and was a result of the stringent lockdown.

The government must not be in denial and take refuge in the fact that this was a global phenomenon. It needs to immediately take the necessary steps required to revive the sagging economy and for that it is important that it accepts the gravity of the situation and that this requires urgent measures.

First, all economic activities must be opened up, albeit with detailed standard operating procedures which ensure safety of the citizens. Second, since demand continues to be weak, the issue ought to be addressed in earnest to revive growth. Third, speedy implementation of the Rs 20 lakh crore package announced by Finance Minister Nirmala Sitharaman is critical. Industry captains have said that only a minuscule portion of the financial booster has actually come into the economy.

Fourth, banks must stop focusing on their balance-sheets and non-performing assets at this crucial juncture and lend more. Bankers are shying away from lending while interest rates continue to be in double digits.

Instead of rolling out measures to revive growth on an immediate basis, Sitharaman laid the roadmap for economic reforms. The reforms process is undoubtedly critical but the government must understand that these are measures which will have a long-term impact and will do little in the near term.

“What we require is to revive the economy immediately. The reform process is welcome but along with that we need measures which will bear fruit instantly,” Assocham secretary general Deepak Sood told IN earlier.

Federation of Indian Export Organizations president Sharad Kumar Saraf earlier said that impact of these measures will be visible only in the medium to long term but not immediately.

While the economic package promised relief to the micro small and medium enterprises (MSMEs), agriculture, and coal, real estate and power sectors, little has been done on the ground level.

However, the silver lining: the worst is over..