Coronavirus: India’s economy shrinks by a quarter, in worst slump for at least 24 years
India’s economy has suffered its worst slump in 24 years as the country continues to grapple with the coronavirus pandemic.
Official data shows the economy shrunk by 23.9% in the quarter from April to June – its worst performance since the government began releasing quarterly data in 1996.
And economists say the impact on GDP is likely to be much higher, given the scale of the country’s gig economy and the number of workers on temporary, short-term or part-time contracts.
The contraction followed a slow 3.1% growth in the previous quarter, which was itself the worst performance in at least eight years, the National Statistical Office said.
While the pandemic has caused economies around the world to contract, India’s growth was slowing even before the COVID-19 crisis struck.
But the country’s lockdown since 25 March has brought the chain of manufacturing, marketing, sales, transport and income to an unprecedented halt.
Construction was the worst-hit sector, declining by half during the quarter, following by growth in trade and hospitality -which contracted by 47% – and manufacturing, which fell by 10%.
The economy has contracted three times before this; in 1965 it shrank by 2.6%, in 1972 by 5.5% and in 1979 by 5.2%.
The latest figures are also a sharp contrast to the economy’s growth of 8.1% in the same quarter last year.
Many economists believe Prime Minister Narendra Modi’s demonetisation of currency in 2016, along with a hasty rollout of a goods and services tax, inflicted blows to manufacturing.
Hopes persist for a tentative recovery during the next quarter as tens of thousands of migrant workers who returned to their villages after losing jobs during the lockdown slowly go back to work.
However, the picture remains grim for many of the jobless.
Around 19 million people have lost their jobs due to the pandemic, according to the Centre for Monitoring Indian Economy.
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In June, a report by the International Monetary Fund projected an economic contraction of 4.5% for India for this year.
India has reported over 3.6 million cases of coronavirus and over 64,000 deaths, and has the third-highest confirmed caseload after the US and Brazil.
On Sunday, the country reported a record 78,761 new coronavirus cases – the world’s worst 24-hour spike ever recorded in a single country during the pandemic.
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