Q1 performance of the Indian economy

The Ministry of Statistics and Programme Implementation (MoSPI) has earlier today released the provisional estimates for the economy in the Q1 (Apr-Jun), FY 2021. The GDP for the quarter at constant prices (2011-12), has contracted by a whopping 23.9% (y-o-y) – the sharpest drop in the GDP ever recorded. The GDP at current prices in the year has witnessed a contraction of 22.6%. The quarterly Gross Value Added (GVA) at Basic Price at Constant (2011-12) has contracted by 22.8% while the GVA at current prices has shrunk by 20.6%. The GDP had registered a growth of 3.1% in the last quarter of FY20 (Jan-Mar).

The contraction of the economy in the first quarter of FY2021 was expected in line of the nation-wide lockdown imposed in the light of the COVID-19 pandemic. The government imposed a lockdown from midnight of March 24th, 2020 which brought practically all economic activity almost to a standstill across the country. Although the economic activities gradually started opening up through planned relaxations from 1st June, for majority of Q1 – the economy remained in a state of near suspension.

As per the government data, all key sectors except Agriculture, Forestry & Fishing witnessed contraction in the current quarter. The worst performance was observed in Construction and Trade/Hotels/Transport/Communication services. A summary of sectoral performance is given below:

Sector-wise performance – Q1 FY21 y-o-y shifts (source: MOSPI)

Contraction in growth was observed in most countries in the Apr-Jun period as an outcome of the pandemic.

GDP Annual Growth Rate – Time period quarter ending June’20 (Source: tradingeconomics.com)

With the pandemic continuing to rage in the country and economic activities still not running at optimum, experts remain unsure about economic revival in the rest of the year.

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