Coronavirus pandemic impact can be seen in Q1FY21 GDP data

The National Statistical Office (NSO) is expected to put out this quarter's numbers of the first quarter of the financial year 2020-21 (Q1FY21) today at 5:30 pm. The figures would put an outlook on the impact of the measures adopted by the government, the Reserve Bank of India (RBI) and other institutions to rebuild the economy that was slowing since the second half of the last year and was badly impacted due to the COVID-19 pandemic.

It is being projected that India, who earned the world's fastest-growing major economy a couple of years ago, would post the steepest ever quarterly economic growth slump on record. It can be the steepest quarterly decline in the gross domestic product (GDP) in Asia and this projection is supported by the sharp uptick in COVID-19 cases so far – the third in the world behind Brazil and the US.

Bloomberg in its report said the data to be released on August 31, 2020, is likely to show a GDP decline of 19.2 per cent in the quarter compared to the corresponding quarter of last financial year (FY20). The data is based on the economists' survey conducted by Bloomberg. It said this would be the sharpest contraction since 1996, the year when the practice of publishing quarterly figures was adopted in India. It is going to be worse than any of the main Asian economies tracked by Bloomberg.

Economists at Bloomberg in their analysis have said that some sectors, like information technology, agriculture and central government expenditure, of the economy, have recorded year-on-year (YoY) growth despite the disruptions caused by the pandemic.

Goldman Sachs in its projection has said that the Indian economy would shrink by 45 per cent on an annualized basis in April-June quarter of FY21. It added that its GDP will slump 5 per cent this fiscal year, which is going to be the steepest contraction in over four decades.

The International Monetary Fund has projected 4.5 per cent contraction, while the World Bank in its projection projected 3.3 per cent contraction and the Asian Development Bank at 4 per cent. The Indian economy was amid a slowdown since last year, i.e. even before the pandemic came into existence, due to the problems in the banking and financial sectors. The pandemic and the lockdown of almost two months hit the gloomy economy more as it brought all economic activities to a virtual halt, which saw shutting down of businesses and reverse migration of millions of citizens from cities to their rural homes.