Economy plummets; Incomes drop

India’s gross domestic product (GDP) fell by 23.9% in the April-June quarter, according to the official data released on Monday. The coronavirus pandemic-induced which hit businesses and livelihoods across the country has caused the steepest decline in India’s post-independence economic history. The GDP data shows a complete collapse of investment and a drastic drop in consumption caused by loss of income. Total investment in the economy has dropped by 50 per cent, while consumption has declined 25 per cent even though government’s consumption has increased.

This decline will reflect adversely in tax collection and other revenues of the governments, both Centre and States. The GDP, which is an aggregation of states SDP’s, forewarns of even sharper decline in state economies, especially J&K, because of a much extended lockdown.  Experts had expected the country’s economy to contract mainly because this quarter had seen more of the 68-day nationwide lockdown restrictions, which were enforced by the government from March 25 to contain the spread of the coronavirus disease (Covid-19) outbreak.

   

Data showed earlier that India’s GDP growth had slowed even before the Covid-19-induced lockdown restrictions. The growth rate in Q4 FY20 at 3.1% was the weakest point in the new data series that had started in 2012-2013. The FY20 real GDP growth is 4.2%, which is also the weakest in the series.  The recovery, some experts say, will mean a slow recovery in the economy.

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