BENGALURU: Indian economy contracted at its steepest pace of 23.9% year-on-year in the June quarter, official data showed on Monday, as the pandemic-induced lockdown dented consumer and business spending.
A Reuters poll of economists had forecast that gross domestic product in world’s fifth-largest economy will contract by 18.3% in the June quarter, compared with 3.1% growth in the previous quarter, the worst performance in at least eight years.
COMMENTARY
SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES, MUMBAI
“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. “The Reserve Bank of India (RBI) won’t lose too much sleep on this number as it was expected. The RBI still has its focus on growth. This (GDP number) slightly improves chances of a rate cut in October. Unless the inflation comes below 5% in the next reading, the RBI still might postpone the rate cut to December.”
RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCIAL HOLDINGS, MUMBAI
“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.
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“Unless the Central and state governments focus on re-starting the economic machine completely, the real process of repair and reconstruction will not gain momentum. Unless this is given the top-most priority, India will get trapped with the unsustainable debt burden.”
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Source: News18