New Delhi, September 1: India's Gross Domestic Product growth for the first quarter of FY-2020-21 contracted by 23.9 per cent, said the report published by Ministry of Statistics and Programme Implementation (MoSPI) on Monday. The fall in GDP is considered to be worst in the last four decades since the country started reporting quarterly data in 1996. Also, India's GDP contraction is amongst the highest in countries' list whose economies were sliced by the COVID-19 pandemic.

According to the report, the data compiled by National Statistical Office (NSO) and published the Union Ministry, shows that GDP at Constant (2011-12) Prices in Q1 of 2020-21 is estimated at Rs 26.90 lakh crore, as against Rs 35.35 lakh crore in Q1 of FY 2019-20. Apart from this, the quarterly gross value added (GVA) at basic price at constant (2011-12) prices for Q1 of 2020-21 is estimated at Rs 25.53 lakh crore as against Rs 33.08 lakh crore in Q1 of 2019-20. India's GDP Contracts by 23.9% in Q1 of FY 2020-21.

Though the government stated that the sharp decline in GDP growth rate is due to the lockdown imposed in the country since April to June, economists fear the data may be far worse when it is revised in due course. Meanwhile, Moody's Investors Service claimed that India, China and Indonesia will be the only G-20 emerging economies in the second half of 2020, post a strong enough pick up in real GDP. GDP Decline: Rahul Gandhi Tweets 'Government Ignored Warnings' as India's GDP Contracts by 23.9% in Q1 of FY 2020-21.

Implications of GDP Contraction:

Experts opine that with the COVID-19 still in place, India's GDP may experience a contraction of 7 per cent for the full financial year, i.e. FY 2020-21. Also, experts believe that this financial year, India's GDP may turn a turtle and contract by 7 per cent in comparison to an average of 7 per cent GDP growth each year since economic liberalisation in the 1990s.

With the most affected sector like construction (–50%), trade, hotels and other services (–47%), manufacturing (–39%), and mining (–23%), more and more people in India are on the verge of either losing jobs or failing to get one. This may happen due to a sharp contraction by mentioned sectors failing to create new jobs in the country. India's GDP Growth May Hit Lowest Since 1947 Due to COVID-19 Pandemic, Warns Infosys Founder NR Narayan Murthy.

Role of Government:

The Union Finance Ministry rolling out Rs 20 lakh crore under 'Atma Nirbhar Bharat' stimulus package to compensate the loss due to COVID-19 lockdown. However, a closer look states that government's expenditure’s share in the GDP has gone up from 11 per cent to 18 per cent, but the overall GDP declined by 24 per cent. With numbers in place, it would interesting to see how the Union Finance Ministry tackles with this situation.

(The above story first appeared on LatestLY on Sep 01, 2020 05:42 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).