It’s been estimated the Indian GDP is likely to get contracted by 20% during the first quarter of the first fiscal year on account of the COVID-19 pandemic. The report came from an established rating firm, CARE RATINGS. The Central Statistics Office (CSO) will release the gross domestic product (GDP) data for the first quarter of FY21.
“Notwithstanding the fact that considerable uncertainty prevails regarding the quarterly economic performance, taking cognizance of the adverse impact of lock-down we are pegging the real GDP growth at 20% YoY for Q1 FY21,” the rating agency said in a report.
The agency said the disruption caused by countrywide lockdown crippled the most economic and commercial activities. Across country various high-frequency indicators slipping into the red during COVID-19 period.
Although the government has exempted certain activities pertaining to agriculture, banking including HFCs and NBFCs, construction activities in rural sectors for lock-down restrictions. Also, these activities have remained muted due to labour shortages.
As per the report, the eight sectors under the broad categorizations of GVA mainly; agriculture, forestry, fishing, public administration and defence and other activities are expected to register growth rates, while other sectors are expected to show de-grow. It’s expected the industry will witness a steep downfall of 35.8% year on year in June quarter.
Adding to that service sector is expected to contract by 16.8%. The tax collection is also hit as aggregated GST collection in Q1 FY21 was 41% low at Rs 1.85 lakhs crore as compared with Q1 FY20 on account of restrictions of movement.
Will India be able to recover from this tough period? Is the idea of ‘Self-reliant’ is feasible? Only the time will tell.