The economy is expected to contract mainly because the quarter saw more than two months of pan-India lockdown.
New Delhi: The Union Ministry of Statistics and Programme Implementation is expected to release today the gross domestic product (GDP) numbers for the first quarter (April-June 2020) of current financial year (FY 2020-21).
Experts believe that the year-on-year GDP contraction during the April-June quarter could be somewhere between 15-25 per cent – the worst growth performance since the country started reporting quarterly GDP data in 1996.
The economy is expected to contract mainly because the quarter saw more than two months of pan-India lockdown, imposed to contain the spread of coronavirus, bringing the nation’s economy to a standstill.
Ahead of the release of the GDP data, the Sensex index plunged by around 900 points, hours after surging by over 500 points to touch the 40,000 mark. The NSE Nifty 50 benchmark dropped to 11,528.95 at the weakest level of the day, having risen to as high as 11,794.25 earlier on Monday.
Earlier in the day, both the market indices staged gap-up openings owing to healthy buying witnessed in finance, banking and oil and gas stocks.
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According to leading economists, the measures to curb the pandemic heavily dented manufacturing, services and other sectors apart from agriculture during the quarter. It was only on June 1 that partial unlock measures were implemented. However, a contraction at this scale has not been witnessed since the quarterly series began in the late 1990s.
We estimate a contraction of 17 per cent in Q1FY21 GDP as a direct result of lockdown, supply side constraints, and low to nil activity in non-essential manufacturing and services. While a robust growth in agriculture during this period is going to provide some cushion to the GDP growth, it will be insufficient to substitute the downfall arising out of the contraction caused in the manufacturing and services sector,” Sunil Kumar Sinha, Principal Economist, India Ratings & Research, told IANS.
India’s FY20 GDP had declined to 4.2 per cent from 6.1 per cent in FY19, the slowest in the last 11 years. On a sequential basis, the quarterly growth rate has progressively declined from 5.2 per cent in Q1 of 2019-20 to 4.4 per cent in Q2, 4.1 per cent in Q3 and 3.1 per cent in the last quarter of 2019-20.
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