As India’s economy sees an unprecedented downfall in the first quarter of the current fiscal, the road ahead seems to be daunting as well. India’s GDP crashed 23.9 per cent in Q1 FY21 due to the nationwide lockdown, however, even as the restrictions have mostly been lifted, the GDP is expected to contract in double digits in the upcoming quarters too. All the four quarters of FY21 will exhibit negative real GDP growth and the fall of full-year contraction in growth will likely be in double digits, which may be around 10.9 per cent, said the SBI Ecowrap report. Q2 real GDP fall will be up to 15 per cent, while the GDP in Q3 will fall up to 10 per cent, the report added.
Immediately after the nationwide lockdown was lifted in the month of June, the economy started to revive, however, as the coronavirus cases started to rise, the growth stalled. It seems that the momentum of economic pick-up has slowed down in Q2 FY21 and our Business Disruption Index is nearly at the same level as on Aug 24, as it was at end-June, said the SBI research.
Till now, GDP growth data of 60 countries has been released and apart from China and Vietnam, all the economies exhibited contraction. However, India’s economic slippage is higher than the average, as the economic fall of 60 economies taken together in April-June 2020 is 12.2 per cent.
Meanwhile, the agriculture sector which is considered to be the growth engine of India’s economic revival has also got a reason to worry. Though the farm sector was the only sector to grow in the first quarter, the rising number of cases in the rural sector has become a major concern. The second quarter could see a reversal of sorts with rural areas now in grip of COVID-19, the SBI research report added.