India’s GDP numbers could be worst in decades. What experts say

The government will release the gross domestic product (GDP) numbers for the first quarter of the current financial year on Monday, which experts have said could be worst since the publication of quarterly data in 1996.

India’s economy is expected to contract mainly because the April-June 2020 quarter had seen more of the 68-day nationwide lockdown restrictions, which were enforced by the government from March 25 to contain the spread of the coronavirus disease (Covid-19) outbreak, according to experts.

Here is what the experts say about the GDP data:

* According to the Economy Watch, the monthly report published by consultancy firm EY India, the GDP growth in the first quarter (Q1) is also likely to be the worst among the four quarters of FY21.

* This implies that the economy may perform better in the successive three quarters of the current fiscal year.

* Ecowrap, a research report published by State Bank of India (SBI) on August 17, estimates Q1 FY21 GDP degrowth will be around -16.5%, though with the relevant caveats in the current uncertain scenario due to the pandemic.

* Economists in a Reuters poll predicted that gross domestic product in world’s fifth-largest economy will contract by 18.3% in the June quarter, compared to 3.1% growth in the previous quarter, the worst performance in at least eight years.

* The same economists predict a contraction of 8.1% and 1.0% in the September and December quarters respectively, the agency said.

* Reuters also reported that Shilan Shah, India economist at Singapore’s Capital Economics, has said the economic damage caused by the coronavirus pandemic-related lockdowns was much worse in India than any other country in Asia.

* “Timely indicators show that the post-lockdown recovery is now stalling, underscoring the long and difficult road ahead for India’s economy,” Shah, who is predicting a 15% contraction in June quarter, said in a note on Friday.

* Reuters also reported that some private economists said the fiscal year that began in April could see a contraction of nearly 10%, the worst performance since Independence.

* According to economists surveyed by Bloomberg, data due later Monday will likely show GDP declined 18% in the quarter to June from a year ago.

* Rahul Bajoria, the Mumbai-based chief India economist at Barclays Plc, is estimating a 25.5% contraction in GDP last quarter given the “unprecedented blow to the economy” from the lockdown.

* “With the national lockdown measures being extended through all of April and May, and most states extending their own partial restrictions through all of June, the rural economy, government spending and essentials will likely be the only sectors mitigating some of the decline,” Bajoria said, according to Bloomberg.

* “The statistics office could announce GDP contraction of 17.5% year-on-year, which could subsequently be revised to a 25% contraction when the informal sector survey is available,” Pranjul Bhandari, chief India economist at HSBC Holdings Plc in Mumbai, was quoted as saying by Bloomberg.

(With agency inputs)