Mumbai, August 31: The June quarter GDP contraction at 23.9 per cent -- the steepest ever on record -- shows that the impact of the lockdown has been "way higher than anticipated", analysts said on Monday.

India's performance is the third-worst among the over 50 countries which have come out with GDP numbers so far, and some analysts expect the remaining three quarters in the fiscal to show negative growth as well. Also Read | India's Core Industrial Output Down 10% in July Due COVID-19 Pandemic.

The Indian economy was facing challenges even before the onset of the COVID-19 pandemic and a host of measures, including deep rate cuts by the RBI and stimulus by the government, have been taken in an effort to arrest the slide since late March. The GDP contracted by 23.9 per cent in Q1 FY21, with agriculture being the only bright spot in the economy. Also Read | Realme V3 Smartphone Likely to Be Launched Tomorrow Alongside Realme X7 Series.

"...the quantum of negative growth shows the impact of lockdown has been way higher than anticipated," analysts at India Ratings and Research said.

The situation would have been far worse but for the banking, financial services and IT and IT-enabled services sectors which continued to operate in the lockdown, they added.

Analysts at Care Ratings said growth in the rural and agricultural economy will not be sufficient to compensate for the decline in urban demand and estimated the FY21 GDP contraction at 6.4 - 6.5 per cent. Without sharing an estimate, India Ratings said the GDP will continue to contract in the remaining three quarters as well.

Their peer Icra said the 23.9 per cent contraction number can be revised downwards, when data on small businesses and the informal sector comes in, and maintained its negative 9.5 per cent growth estimate for the full fiscal.

It said there is a "wide discrepancy" between the double-digit growth of government final consumption expenditure on the expenditure side, and contraction in public administration, defence and other services on the production side, terming it as "rather incongruous".

Singaporean bank DBS said the sharp de-growth in GDP is owing to the "stringent" lockdowns but the surprise drag was from the public administration, defence and other services segment which contracted likely due to a complete stop in the private sector.

It said fiscal push will carry a larger multiplier than easier financial conditions rendered by the RBI but added that the central bank will still lean towards rate easing in the second half of the fiscal year.

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