India is bracing for the worst GDP data in decades
- A Reuters poll of economists has projected that India would have shrunk 18.3% between April and June 2020, compared to 3.1% growth in the preceding three months.
- Agriculture may be the only growing sector but that won’t be nearly to feed all the people dependent on it.
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Other estimates, like the one from Nirmal Bang, estimates that the Indian economy would have shrunk by a sixth. This will be the first contraction in gross domestic product (GDP) since the government started providing quarterly estimates in the 1990s.
|Sector||April-June GDP growth||Contribution to GDP|
|Industry (excluding construction)||-18.5%||21.2%|
|Services (including construction)||-19.8%||56.8%|
Agriculture may be the only growing sector but that won’t be nearly to feed all the people dependent on it. Nearly half of the country’s population relies on the farm sector for livelihood whereas the farms make for less than a fifth of the GDP.
What’s worse, the same Reuters poll has projected an 8% contraction between July and September, and another 1% in the following three months. The government has already announced a $266 billion stimulus package, aside from all the money that the Reserve Bank of India has pumped in.
The excess cash sloshing around in the banking system has been over ₹3 lakh crore ($40 billion) for about a month now. It just shows that people are depositing more money in the bank than borrowing from it. That is not good business for banks or a good sign of the economy.
With India ranking among the worst three countries affected by the pandemic — US and Brazil have more infections than India — the economy is expected to suffer through the rest of this year.
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