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COVID-19 Impact: India’s GDP Shrinks 23.9% in Its Worst Drop Yet

The Quint
·2-min read

As India gradually becomes the global hotspot for COVID-19, the gross domestic product for the first quarter ended June of FY 2020-21, released on Monday, 31 August, dropped 23.9%, revealing the extent of damage the pandemic has caused to the country’s economy.

With economic activities almost brought to a standstill due to the nationwide lockdown to curb COVID-19, most sectors like manufacturing and construction received a heavy dent.

Agriculture, on the other hand, offered some respite, having advanced 3.4 percent in the first quarter.

Here is the sector-wise breakdown:

Asia’s third largest economy saw the steepest fall in GDP first time in four decades. If the negative growth rate continues for a second quarter in July-September, India will reel from recession.

On a sequential basis, the quarterly growth rate has progressively declined from 5.2 per cent in Q1 of 2019-20 to 4.4 percent in Q2, 4.1 percent in Q3 and 3.1 percent in the last quarter of 2019-20.

The Gross Value Added (GVA) stood at -22.8 percent as against the estimates of -19.2 percent.

‘Decline Due to Lockdown’: Chief Economic Advisor

Chief Economic Advisor KV Subramanian told reporters, “April-June quarter economic performance is primarily due to exogenous shock felt globally due to COVID-19 which resulted in global lockdown in April to June quarter. Even India was in lockdown in the first quarter.”

During the GST council briefing on 27 August, the finance minister had referred to the coronavirus outbreak as an ‘act of God’ which may lead to a contraction of the economy in the current fiscal.

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