SoDATA – Twice as much as it had contracted four decades back – in 1980 India’s economy contracted 5.2%, the world’s second biggest consumer population-based country is heading for a double digit contraction in GDP this year.
The GDP (gross domestic product) growth in the quarter to June could contract about 5%, says an expert as cited by livemint. Extrapolating the contraction number for third and fourth quarter combined while keeping the same compelling factors which were in play in the first and second quarter, the annual drop in growth could very well double, says an expert.
It would be a double or triple whammy in such a scenario, as the country’s BJP Government led by Narendra Modi remains peppered with several issues on the table. The Kashmir lockdown, nationwide protests against the Citizenship Amendment Act and NRC, and the latest Coronavirus outbreak fallout have Delhi in damage control mode.
“The biggest whammy will be to private consumption, which accounts for 57% of India’s GDP,” said Deutsche Bank’s Chief India Economist Kaushik Das. “With all non-essential consumption dropping virtually to zero for a week in the current quarter means year-on-year GDP growth plunges to just about 1%,” he wrote.
Das expects real GDP growth to collapse in April-June (second quarter) to a negative print of 5% year-on-year or more.
“We don’t rule out a possibility of negative real GDP growth in July-September (third quarter) as well,” Das said, adding “it will take time to re-start economic activities and push the economy back to a pre-lockdown stage.”
Finance Minister Nirmala Sitharaman has reportedly promised measures “sooner than later” to support the economy amid the coronavirus pandemic.
Covid-19 could test the overstretched health system of world’s biggest democracy and the second largest consumer population — both attributes have remained tightroped pre-virus.