Indian GDP growth drops from 3.1% in the January-March quarter to 4.2% in FY20
India’s GDP grew 3.1% during January-March this year but as the pandemic shattered the economy, the GDP growth for FY2019-20 went down at 4.2% against 6.1% in FY2018-19.
There is a change of undergoing much worse conditions due to the prevailing threat of COVID-19 and consequent restriction and lockdowns brought upon movement of people.
At 3.1 percent, India’s “real” or inflation-adjusted GDP growth was the lowest in 44 quarters, national income data released by the Central Statistics Office (CSO) on May 29, showed. Asia’s third-largest economy, which was the engine of global growth until recently, was staring at the possibility of slipping into a full-blown recession, the first time in 41 years.
An economy is often described to be in a recession when real GDP contracts in two successive quarters.
India’s GDP growth was revised downwards to 4.1% in October-December 2019-20. The numbers for the July-September quarter for the same year came at 4.4% and that for the April-June quarter at 5.2%.
Fourth-quarter corporate results have also shown a recession in profit levels across the sectors. The purchase of cars, domestic sales, production, and automobile exports has hit the ground. There has been observed a similar downfall in the fast-moving consumer goods.
Gross value added (GVA), which is GDP minus taxes and is seen as a more realistic gauge to measure economic activity, grew 3 percent in January-March 2020, compared to 3.5 percent in the previous quarter and 5.6 percent in the fourth quarter of the previous year, implying that the deceleration is sharper than what the headline GDP growth numbers suggest.
The manufacturing sector contracted 1.4 percent in January-March 2020, from 2.1% in the same quarter last year, and a contraction of 0.8 % in October-December. at basic prices. For the whole year, the manufacturing sector expanded 0.03 % in 2019-20, a significant fall of 5.7% in 2018-19.
Factory output measured by the index of industrial production (IIP) contracted 16 percent in 2020. This shows the declining momentum of both investment and consumption. Even core industries productions of steel, electricity, coal, and cement are falling or have been stagnant in recent quarters.
The agriculture sector, which accounts for about 14 percent of GDP but supports more than half of India’s population, grew 5.9 percent during the quarter, compared to 1.6 percent in the same quarter last year and 3.6 percent in the previous quarter.
Construction activities have also experienced withdrawal. Construction sector GVA contracted 2.2 percent during January-March, 2020, compared to a growth of 6 percent in the same quarter last year and 6.6 percent in October-December 2019.