India GDP Live updates: Economic growth declined due to intense lockdown, says CEA K V Subramanian

What former finance minister P Chidambaram said

Analysts at Care Ratings said growth in the rural and agricultural economy will not be sufficient to compensate for the decline in urban demand and estimated the FY21 GDP contraction at 6.4 - 6.5 per cent.

The quantum of negative growth shows the impact of lockdown has been way higher than anticipated, analysts at India Ratings and Research said.

Deep contraction in GDP on expected line, recovery to be gradual, says industry

The industry said the steep 23.9 per cent contraction in the GDP in April-June was on expected lines reflecting the "stalling of economic activities" due to the lockdown imposed in response to coronavirus pandemic. However, it anticipates the economy to stage a gradual recovery in the coming quarters on account of reforms, the Rs 20 lakh crore stimulus package and measures taken by the Reserve Bank. Read more

Indian economy has clearly landed in a severe vicious cycle with the need for stimulating demand becoming paramount while the capacity to support demand by the government is at its weakest, Dr Srivastava said.

Growth decline due to intense lockdown; V-shaped recovery in some sectors: CEA

Chief economic adviser (CEA) K V Subramanian said the country will witness better performance in the subsequent quarters, aided by a 'V-shaped' recovery in various sectors. Read more

Agriculture sector

Agriculture emerged to be the only sector to witness a positive growth of 3.4 per cent during the quarter. This can be attributed to increase in agricultural produce owing to good monsoon rains and targeted government spending.

Financial services -- the biggest component of India's dominant services sector -- shrank 5.3 per cent, while trade, hotels, transport and communication declined 47 per cent.

What Assocham president said

"The 23.9 per cent contraction in the GDP figures of the country in the first quarter announced today by the NSO has not come as a surprise. As these three months witnessed a total lock-down and loss of business opportunities to control the Corona virus pandemic, stated Niranjan Hiranandani, president, ASSOCHAM. "We should not be getting disheartened by these numbers thought it is probably at the historic low levels. Going forward we are anticipating contractions - though a bit better in numbers - in the July-September quarter and the October-December quarter as well. However, in the quarters post that, we anticipate some amount of recovery to take place,” he added.

Manufacturing sector

Data showed that manufacturing has already entered recession as the output fell 39.3% in June quarter after falling 1.4% in the previous quarter.

Quarterly GDP numbers since Q1 2014-15

CEA on agri numbers, consumption

"Agriculture sector has grown by 3.4 per cent, which indicated that the reforms and measures taken place has shown results," the CEA told ET Now. And, consumption is mainly affected by the health sector due to Covid pandemic, he added.

What CEA said on economy

"India is experiencing a V-shaped recovery and there are clear indicators signalling it," chief economic advisor Krishnamurthy Subramanian told ET Now. He also mentioned that the "worst is really behind us."

What experts commented

"This kind of a decline was expected as there was a lockdown for roughly half of the quarter. Monday's infrastructure data showed the decline was less than 10% and with the exception of cement and steel, all other sectors have done reasonably well," Sujan Hajra, chief economist, Anand Rathi Secutities, Mumbai told news agency Reuters."Contraction of real GDP at 23.9% appears to be underestimated, as data collection efforts were hit by the pandemic. The NSO had to use substitutes and proxies to estimate the losses of informal sector. So there is a very high probability that this data will undergo several revisions in the future. But broader trends are clearly visible," Rupa Rege Nitsure, group chief economist, L&T Financial Holdings, Mumbai, told Reuters.

Most rating agencies had projected contraction in India's GDP for the first quarter of 2020-21. On the other hand, China's economy grew by 3.2 per cent in April-June after recording a decline of 6.8 per cent in January-March 2020.

The GDP had expanded by 5.2 per cent in the corresponding April-June period of 2019-20, according to data released by the NSO.

GDP growth contracts by 23.9% in Q1 due to Covid pandemic

GDP growth contracts by 23.9% in Q1 due to Covid pandemic compared to 3.1% growth in previous quarter. GVA (gross value added) showed a contraction of 22.8%. Read more