GDP shrinks 24%; expected, says govt

Tribune News Service
New Delhi, August 31

The government on Monday put up a brave face on the worst-ever in the country's gross domestic product (GDP) for the first quarter of 2020-21, saying it was along expected lines given the higher stringency with which the lockdown was imposed in the country.

Worst since 1870

• Covid lockdown-battered economy suffered biggest crash since the 1870 recession

• Agriculture sector saw a growth of 3.5%, which was the only saving grace

• Railway freight in July stood at 95% of the July 2019 levels

Pointing out that this was the worst global recession since 1870, Chief Economic Adviser (CEA) KV Subramanian said "what we were going through is a one-and-a-half century event'' but took solace from the improvements in some economic fundamentals in August.

The GDP for April to June this year fell by a massive 23.9 per cent compared to the same period last year with a 3.5 per cent growth in the agriculture sector being the saving grace.

The index of eight core industries fell by 20.5 per cent for April to June compared to the same period last year. The group of eight—coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity—comprise 40.27 per cent of the index of industrial production. The fiscal deficit was also going out of hand. In April-June, it was at Rs 8.21 lakh crore because the total receipts were only Rs 2.32 lakh crore whereas the expenditure was Rs 10.54 lakh crore. Last year, the fiscal deficit for the same period was Rs 5.47 lakh crore.

Subramanian sought to give an upbeat scenario by claiming that India was beginning to experience a V-shaped recovery. For instance, core sector growth had fallen to 38 per cent in April but the decline was progressively reduced to 22 per cent in May, 13 per cent in June and 9.6 per cent in July.

The CEA also pointed out that railway freight in July was at 95 per cent of July 2019 levels and it was six per cent higher in the first 26 days of August this year compared to the same period last year. Similarly, e-way bills, which capture inter-state trade, in August have nearly climbed to last August's levels.

Meanwhile, investor wealth tumbled by Rs 4,55,914.68 crore following heavy selloff in the equity market where the BSE benchmark Sensex plummeted 839 points amid fresh India-China border tensions. Investors were also cautious ahead of the release of GDP data, traders said.

After rallying 543 points in morning trade, the BSE Sensex surrendered all gains to close at 38,628.29, a decline of 2.13 per cent.

from The Tribune https://ift.tt/3lJ3kij