Data released by the National Statistical Office (NSO) showed that GDP in the April-June quarter of the financial year 2020-21 slumped 23.9% compared with growth of 3.1% in the previous (January-March) quarter.
- Among major economies, India’s contraction was the sharpest. China, after posting a contraction in the January-March quarter has recovered with 3.2% growth in the April-June quarter. Globally, India is close to UK’s contraction of 20.4% in the second quarter.
- Indian economy the third-largest economy of Asia was already faltering in preceding quaters and in the first quarter of financial year 2020-2021 (April-June), it suffered a contraction for the first time since India began maintaining quarterly records from 1996.
- Agriculture was the only bright spot in all the sectors. The sector, which has benefited from a robust monsoon, rose an annual 3.4% in the June quarter compared with a growth of 3% in the June quarter of 2019-20.
- On a quarterly basis, recession deepened in the manufacturing sector as it posted four consecutive quarters of contraction while the construction sector declined for the third quarter in a row. Economists define a recession as two consecutive quarters of negative growth.
- The manufacturing sector, which has been in the grip of a sharp slowdown, fell 39.3% in the June quarter while construction slumped 50.3% during the three-month period.
- Trade, hotels, transport and communications sector posted the second-highest contraction, declining 47% in the June quarter.
- The services sector, which accounts for nearly 60% of the economy, slumped 20.6% in the June quarter, compared to a 4.4% growth in the previous. Services such as hotels, restaurants, hospitality and airlines, have borne the maximum brunt.
- Private consumption, a key driver of the economy witnessed a sharp decline of 24.5% in the first quarter from 8.5% increase in the year-ago period.
- However, government consumption saw a 20.2% increase in the June quarter compared with the 9.5% growth in the same quarter of the previous year. This highlights the role of government spending in supporting the economy.
Source : TOI