India GDP up 1.6% in January-March, sharp contraction expected in Q1

MUMBAI (ICIS)–India’s GDP grew in its fiscal fourth quarter (January-March) by 1.6%, year on year, showing the economy was on the road to recovery before the pandemic’s second wave hit in April.

By sectors, manufacturing, real estate, construction, and finance showed a recovery in the fourth quarter, according to the Ministry of Statistics & Programme Implementation (MOSPI) on Monday.

OUTLOOK FOR Q1 SOMBRE
According to MOSPI, GDP is on course to shrink by 24.4% this quarter (first quarter of the 2021-2022 fiscal year).

India imposed a strict two-month nationwide lockdown in March 2020 to curb the impact of the pandemic, and that is set to impact growth in the April-June quarter.

The second wave of the Covid-19 pandemic has forced restrictions across multiple states in the country and has severely impacted economic activity.

On Monday, India reported its lowest rise in new coronavirus infections since 10 April, with 152,734 positive cases and fatalities at 3,128.

Total infections now stand at 28m, while the death toll has reached 329,100.

REINING IN THE PANDEMIC
India’s central bank the Reserve Bank of India (RBI), which released its annual report on 27 May, has said that the pandemic is the biggest risk to India’s economic growth outlook.

The central bank added growth prospects will depend on how fast India can arrest infections.

The RBI has retained its GDP growth projection for fiscal 2021-22 at 10.5%.

India also revised its annual GDP estimates for the fiscal year, which ran from April 2020 to March 2021, predicting now the country’s economy contracted by 7.3%, year on year.

The decrease would be less severe than the earlier estimate of a hit to GDP of 8.0%.

GDP growth in 2019-2020, prior to the pandemic, stood at 4%.

India’s economy grew by 0.5% in the quarter October-December; in the July-September quarter it had fallen by 7.4% in the July-September quarter.