The GDP data for the June quarter arrived on 31 August and these figures have disappointed the economy on a lot of fronts. The figures of -23.9 GDP growth in the first quarter of the financial year are a clear testimony that the Corona virus crisis has broken India’s economy. Sector-wise, the construction, mining and manufacturing sectors have been badly affected. But it would be important to know the reaction of veteran economists on these figures.
Most economists believe that GDP figures have been as expected or worse. The poll of the agencies also had already predicted a negative growth rate of 15 to 25 percent.
ICTI Principal Economist Aditi Nair has told Reuters that ‘it is clear that such a big decline in the economy has come from the lockdown caused by the Corona crisis. We had predicted that about 25 percent of the contract will be seen in the economy and the same has happened.
However, when the data of MSME and these formal sectors comes, the picture will be clearer and these figures can go further down. Our estimate is still that the economy will remain -9.5% in the financial year 2021.
Aditi Nair, Principal Economist of ICRA
Senior Economist of Kotak Institutional Equities Suvodip Rakshit said that the real GDP figures were worse than what we had estimated.
Now the government will have to decide whether to push the investment or take steps to increase consumption. According to the condition of the state exchequer right now, it may take up to the first half of financial year 2022 to return to the track of growth.
Suvodip Rakshit, Senior Economist at Kotak Institutional Equities
Madhavi Arora, lead economist at Edelweiss Security, says that GDP figures have been much worse than our estimate. Our estimate was -18%.
If found, the real estate and finance sector has performed better than expected. But the public administration sector, which testifies to government spending, has performed much worse than expected. If a similar picture remains in the next quarters, the government will have to relax its fiscal planning a little.
Madhavi Arora, Lead Economist of Edelweiss Security
Sakshi Gupta, economist at HDFC Bank, says that all the figures have not been reported due to the lockdown in the first quarter. ‘We believe that there will be a further decline in these figures. If agriculture is also removed, GVA in the first quarter has been negative by 27%.
The signs of economic recovery will be seen by the end of this financial year or not, it will decide on the improvement of the rural sector. But due to the rapid spread of corona virus, the rural sector may also see worse performance than anticipated in the coming days. We still believe that there will be a 7.5 percent drop in GDP in the whole year.
Sakshi Gupta, HDFC Bank Economist
Rajni Sinha, Chief Economist of Knight Frank India, believes that GDP figures have remained the same as expected. In the first two months of the first quarter, 70 to 80 percent of the economy remained closed during the lockdown. But now the unlock process is moving fast for the last few months.
Most parts of the economy have returned 70 to 90 percent of the track compared to last year. Permanent improvement can be expected only when the number of corona virus cases is low. Now there is a need for the government to spend on infrastructure and try to generate demand in the economy.
Rajni Sinha, Chief Economist of night Frank India