India's gross domestic product (GDP) may have contracted by 20 percent in the first quarter of the current fiscal year due to COVID-19 pandemic-induced disruptions, Care Ratings said. The Central Statistics Office (CSO) will release the GDP data for the April-June period on 31 August, which is expected to statistically mirror the adverse impact of the pandemic led lockdown on economic growth.
"Notwithstanding the fact that considerable uncertainty prevails regarding the quarterly economic performance, taking cognizance of the adverse impact of lockdown we are pegging the real GDP growth at (-) 20 percent YoY for Q1 FY21," the rating agency said in a report.
Disruptions caused by the countrywide lockdown have crippled most economic and commercial activities across the country, the agency said, as has been depicted by various high frequency indicators slipping into red during these months.
Although the government had exempted certain select activities pertaining to agriculture, banking including NBFCs (non-banking finance companies) and HFCs (housing finance companies), construction activities in rural areas from lockdown restrictions, these activities have remained muted due to labour shortages and other operational issues.
It said gross value added (GVA) is expected to have contracted by nearly 19.9 percent in the June-ended quarter, led by broad based contraction across sectors, barring agriculture and public expenditure.
Low tax collections weighed on GDP, dragging down the growth further, the report noted.