Minus 23.9 per cent: In falling GDP, Agriculture output is only positive

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With MINUS 23.9 per cent GDP, India has formally entered a section of recessionary section this 12 months, knowledge launched by the National Statistical Office (NSO) on Monday confirmed.

India’s gross home product (GDP) shrank by 23.9 per cent within the June quarter, resulting from COVID-19 pandemic and the lockdown that adopted. With MINUS 23.9 per cent GDP, India has formally entered a section of recessionary section this 12 months, knowledge launched by the National Statistical Office (NSO) on Monday confirmed. The Covid-19 pandemic-induced financial turbulence together with measures to curb its outbreak, closely dented India’s economic system. It is the worst efficiency since quarterly measurement started in 1996 and doubtless the primary contraction since 1980.

According to National Statistical Office (NSO), the GDP at ‘Constant (2011-12) Prices’ in Q1 of 2020-21 is estimated at Rs 26.90 lakh crore, as towards Rs 35.35 lakh crore in Q1 of 2019-20, displaying a decline of 23.9 per cent.
The Gross Domestic Product (GDP) had grown by 5.2 per cent within the corresponding quarter of FY2019-20. In the quarter simply previous Q1 FY21, the financial progress was at 3.1 per cent. The nation had noticed mobility restrictions as mandated beneath the lockdown measures for the higher a part of the primary quarter of FY21.

Worst Fall Among Global Peers

Country Growth
India -23.9
UK -21.7
France  -19.0
Germany -10.1
Japan -9.9
USA -9.1
Mexico -0.8
Vietnam .04
Brazil 1.0
China 3.2

India has thus far reported over 36 lakh circumstances of the novel coronavirus and over 64,000 deaths, with reporting over 70,000 Covid-19 circumstances per day. Now, India is the third worst-hit nation on the earth, behind only the United States and Brazil. 
Restrictions within the manufacturing sector, transportation and the market have hit providers and retail gross sales. Needless to say, hundreds of thousands of staff misplaced their jobs because the economic system got here to a standstill. Construction, manufacturing and commerce, resorts and transport had been worst-hit sectors, recording contractions of fifty.3 per cent, 39.3 per cent and 47.0 per cent, respectively.

Agriculture only silver lining

However, amid the grim, one sector — Agriculture– emerged because the only saviour giving hope for future. Agriculture sector registered a 3.4 per cent GDP progress. Had it not been a strong efficiency within the Agri sector, India’s GDP would have tumbled additional. 

 “Positive agricultural output is the only positive element in the GDP print,” says Nish Bhatt, Founder & CEO, Millwood Kane International.
 “As the April-June quarter saw the maximum period of the national lockdown the degrowth was severe, going forward as the government re-opens the economy in phases, government spending, and festive season spending is expected to help the growth rate to be in the positive territory going forward. While the RBI has done its part to help boost consumption and economy, a further rate cut may help boost credit offtake.”
 “The government may still have some more fire-power with further stimulus measures for specific sectors. Good monsoon, high Agri output will help with a pickup in rural consumption. Government spending, reforms, and more measures to boost consumption are required to bring back growth on track,” Bhatt says. 

Quarterly Estimates of GVA

Industry Apr-June (2019-20) Apr-June (2020-21)
Agriculture, forestry & fishing 3.0% 3.4%
Manufacturing 3.0% -39.3%
Trade, lodge, transport, communication & providers associated to broadcasting 3.5% -47.0%
Public administration, defence & different providers 7.7% -10.3 %
Gross Value Added (GVA) 4.8% -22.8%
Gross Domestic Product (GDP) 5.2% -23.9%
(at Basic Prices in Q1 (April-June) of 2020-21    

While Nikhil Gupta, Economist – Institutional Equities, Motilal Oswal Financial Services Ltd mentioned: “India’s real GDP declined 23.8% YoY in Q1 FY21, the worst among major nations”.
Commenting on the declining GDP, Mr Gupta additional defined; It is worse than the consensus of 18% fall, actual GDP decline is a shocker. Of course, it is not corresponding to something in historical past and that is why few surprises are highlighted beneath:
 * *Private consumption fell 27% (vs. our exp of -18%)
* *Total investments declined 47.5% (vs our exp of -30%)
* *Government consumption grew 16.4%, in keeping with our forecasts
* *Net exports posted the best surplus in actual phrases (and third on report since FY96)
* *Nominal GDP declined 22.6% YoY final quarter, implying an output lack of INR15T (assuming 8% YoY progress within the pre-COVID situation)
* *Real GVA declined 22.8% YoY, of which providers had been the largest shock. ‘Trade and transportation’ fell by virtually half, and ‘public administration and defence’ (which incorporates govt spending and all else) shrank 10% final quarter.
* *GDP deflator grew 1.6%, extra in keeping with the deflation in WPI, reasonably than CPI.”
“Going ahead, it seems that Jul’20 was worse than Jun’20 and the preliminary knowledge for Aug’20 is additionally not very encouraging. There could be one other contraction in Q2FY21; nonetheless, what must be seen, and as we now have all the time feared, the turnaround from late CY20 might be a lot slower than the overall expectations,” he further added.

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