GDP slows to 3.1 per cent in Q4, lowest in 11 years

Hit by disruption in consumer demand and supply due to the spread of Covid-19 and the nationwide lockdown, India’s gross domestic product (GDP) grew by 3.1 per cent in the January-March quarter of 2019-20.

The nationwide lockdown, which was imposed from March 25, affected Q4 GDP. While this was the lowest in 11 years, it was much better than anticipated.

GDP growth for the fiscal year 2019-20 stood at 4.2 per cent compared to 6.1 per cent in 2018-19, data released by the Central Statistics Office showed.

The Reserve Bank of India had earlier pegged GDP growth for 2019-20 at 5 per cent.

The Q4 FY20 GDP number at 3.1 per cent is better than expected, said Dhiraj Relli, managing director & CEO, HDFC Securities.

The GDP growth figures for October-December quarter of 2019-20 was revised downwards to 4.1 per cent. The July-September quarter for the same year registered a growth of 4.4 per cent and 5.2 per cent for April-June quarter.

India’s gross value added (GVA)—GDP without taking taxes into account— increased by 3 per cent in January-March 2020 against 5.6 per cent in the fourth quarter of the previous year. In the October-December quarter of 2019-20, GVA stood at to 3.5 per cent.

Another dataset is worrisome. Eight core sector industries’ output contracted 38.1 per cent in April 2020-21. Economic activities almost across the country came to a near halt from March 25 and remained so through the month of April. Economists have predicted a sharp decline in GDP growth for the April to June quarter of the current financial year.

Experts said that the GDP growth for the April-June quarter was expected to slip into the red with a full-blown recession for the full financial year.

While the State Bank of India has predicted a contraction 6.8 per cent for the current financial year, Japanese brokerage firm Nomura projected a GDP contraction of 5.2 per cent. According to the International Labor Organization released last month, about 40 crore workers in the Indian’s informal sector could be pushed into poverty due to the stringent lockdown..