Q1 GDP today: India may be looking at worst GDP contraction in 20 years.
1 /8 What to expect?
GDP of India data for 1st quarter to be out today. The growth is expected to witness the worst fall in 20 years. Coronavirus pandemic and subsequent lockdowns are believed to have played primary role in pulling down the growth numbers. So far, UK has reported the biggest slump in GDP among the top 20 economies of world with a 21.7% plunge in the June quarter, its deepest contraction on record.
2 /8 The Covid effect
India has reported over three and a half million cases of the novel coronavirus - third behind only the United States and Brazil.
Continuing restrictions on transport, educational institutions and restaurants - and weekly lockdowns in some states - have hit manufacturing, services and retail sales, while keeping millions of workers out of jobs.
3 /8 Forecast
Some private economists said the fiscal year that began in April could see a contraction of nearly 10%, the worst performance since India won independence from British colonial rule in 1947. Forecasts for the expected contraction in the GDP range from 15 per cent to 25.9 per cent, with a median estimate of 19.2 per cent, according to news agency Bloomberg.
4 /8 The Fiscal Relief
The mega Rs 20 lakh crore stimulus package announced by PM Modi includes previously announced measures to save the lockdown-battered economy, and focuses on tax breaks for small businesses as well as incentives for domestic manufacturing. The combined package works out to roughly 10 per cent of the GDP, making it among the most substantial in the world after the financial packages announced by the United States, which is 13 per cent of its GDP, and by Japan, which is over 21 per cent of its GDP.
5 /8 RBI at its best
The Reserve Bank of India, which has reduced the benchmark repo rate by a total of 115 basis points since February, kept rates on hold earlier this month amid rising inflation. It also provided a fresh lifeline to millions of stressed small businesses by extending the provision of restructuring of loans.
6/8 Banking system
The economic impact of the coronavirus pandemic may lead to higher non-performing assets and capital erosion of banks while the redemption pressure on non-banking finance companies (NBFCs) and mutual funds are emerging as crucial stress points in the financial system, Reserve Bank of India Governor Shaktikanta Das said.
7 /8 The tough choice
Policymakers said federal and state governments are unable to increase spending, following a more than 40% fall in tax receipts in the June quarter.
8/8 A few bright spots
However, following normal monsoon rains the farm sector, which accounts for 15% of economic output, may give hope that rural economy will be able to support millions of migrant workers, who returned to their villages from the cities when the lockdown began.
**Disclaimer-This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.