The Ministry of Statistics and Programme Implementation (MoSPI) will announce the initial official estimates of India's economic growth (GDP figures) for the April-June quarter (Q1) of 2020-21 today. Though economists are predicting the year-on-year contraction in GDP at somewhere between 16 and 25 per cent -- a historic low -- the actual extent of the damage to the Indian economy by coronavirus pandemic and subsequent lockdowns will be clear once the report is out today. Economists believe these numbers could be revised up to 25 per cent when the data on informal sector survey is available.
As per current projections, the gross value-added growth may also shrink around 19-25 per cent in the quarter. The Q1 estimates are based on overall IIP data, monthly account of expenditures of states and Centre, agri production, and performance of sectors like transport, banking and insurance, etc.
Experts says sectors like manufacturing, construction, trade, hotels, transport and communication sectors, which account for almost 45 per cent of the country's GDP, were the worst affected during Q1. As per the rating agency ICRA, the 'lockdown' quarter will see a GDP and GVA contraction at basic prices in year-on-year (Y-o-Y) terms at around 25 per cent each. India Ratings and Research also points out the severity of COVID-19-led business disruptions to predict a negative growth of 17.03 per cent. Soumya Kanti Ghosh, Group Chief Economic Adviser at the State Bank of India says the Q1 FY21 Real GDP de-growth would be around -16.5 per cent.
The overall data on high-performance indicators suggest the Indian economy took the biggest hit in April and recorded a slow rebound in May and June. Most high-frequency indicators, however, such as exports, consumer durables, auto sales are yet to recover to pre-COVID levels. While consumer durables sale shrank 67 per cent in Q1FY21, auto sales recorded de-growth of -75.5 per cent during the quarter, BloombergQuint data suggests. Exports also declined around 36.3 per cent in Q1 as countries resorted to shutdowns, leading to drastic drop in business activity.
Around 23 per cent -- about one fourth of the country's entire workforce -- was rendered jobless in April after the nation-wide shutdown in March 25. However, as the country started reopening, the unemployment fell to 11 per cent in June, thereby recording an overall increase of 19.3 per cent in unemployment the first quarter. Experts believe that among all the key indicators, agriculture, public expenditure, power, gas, water and utility services will support the GDP growth.
India's GDP grew at 3.1 per cent in the final quarter of financial year 2019-20, lowest in 44 quarters. The overall growth for FY20 slumped to 4.2 per cent, which was the lowest since FY09 when GDP was 3.09 per cent.