India's economic growth in the January-March quarter of 2019-20 expanded at its slowest pace in 40 quarters at 3.1%, dragged down by the manufacturing and construction sectors and some impact of the national lockdown in late March. Only the farm sector and government spending stayed firm.
Data released by the National Statistical Office (NSO) also showed overall GDP growth in 2019-20 slowing to an 11-year low of 4.2%, lower than the earlier estimate of 5%. Several major economies which had imposed lockdowns earlier have witnessed a contraction in their January-March quarter growth while a handful of countries led by India have managed to post expansion during the period. The NSO said that both the quarterly as well as annual GDP growth numbers are likely to undergo revision as data flow from “economic entities had been impacted.”
Economists say the lockdown, which has crippled economic activity, will have an impact on growth in the coming quarters with several research houses, investment banks and brokerages estimating a sharp contraction. Several key sectors of the economy such as the services sector, which accounts for nearly 60% of the economy, have suffered due to the lockdown and led to large job losses.
Farm sector posts robust 6% growth
The government has unveiled a relief package to nurse growth but experts say more needs to be done to help revive growth. The Reserve Bank of India (RBI) has also cut rates sharply since the lockdown and has unveiled massive liquidity injection to help the economy gather momentum but it has estimated growth to contract in 2020-21 due to the impact of the lockdown in the country as well as across the globe. The IMF expects India and China to be the only economies to register growth while other economies around the globe are expected to contract sharply, a view not shared by several other economists who expect the Indian economy to contract.
The manufacturing, construction and services sectors contracted in the March quarter which economists attributed to the impact of the lockdown. The trade, hotel and transport and manufacturing sector saw growth drop to the lowest level since 2011-12 in Q4 FY20, according to Care Ratings.
