India's Apr-June GDP Contracts By A Massive 23.9%; The Biggest Plunge In Indian History

On Monday, data released by the National Statistical Office (NSO) showed that India's GDP (gross domestic product) contracted by 23.9 percent in the April-June quarter, when compared to 5.2 percent growth in the same period a year ago.

The government data showed that GDP at constant prices for the first quarter is estimated at Rs 26.90 lakh crore, as against Rs 35.35 lakh crore in April-June 2019.

The NSO in a statement also said that the data used to calculate GDP for the period differs from regular course due to restrictions caused by the COVID-19 pandemic.

"With a view to contain spread of the COVID-19 pandemic, restrictions were imposed on the economic activities not deemed essential, as also on the movement of people from 25 March, 2020. Though the restrictions have been gradually lifted, there has been an impact on the economic activities as well as on the data collection mechanisms," it said.

"The timelines for filing statutory returns were also extended by most regulatory bodies. In these circumstances, the usual data sources were substituted by alternatives like GST, interactions with professional bodies etc. and which were clearly limited," NSO added.

Other data used, that is in case of macro-economic indicators like IIP and CPI, used in the estimation of National Accounts aggregates, have also been impacted by the lockdown and other movement restrictions in light of the pandemic.

"Estimates are therefore likely to undergo revisions for the aforesaid causes in due course, as per the release calendar," the NSO said.

The results for a period when the nationwide lockdown was prevalent for most of the days of the quarter, is in line with the estimates of 15 to 29 percent contraction estimated by various polls. It is also the worst ever GDP performance since India started recorded quarterly GDP data in 1996, according to Bloomberg.

The results for the April-June period is considered key to understanding India's economic growth recovery as the nation currently faces the fastest rise in the number of COVID-19 infections seen anywhere in the world.

Ahead of the release of official GDP data, Indian stock markets ended their six-day rally on Monday with the biggest single-day fall in over a month. BSE's Sensex closed 2.1 percent lower at 38,628 and NSE's Nifty 50 was down 2.4 percent to end at 11,364.