The Indian economy was continuously slumping since 2017. Although the pandemic forced the economy to drop to a dire 23.9% and perform the worst among other major economies, Major drops were already being reported since 2018.
Although the Indian economy has been hit brutally by the COVID-19 pandemic, the contraction of -23.9% in GDP was not to only be blamed on the pandemic. Unfortunately, India’s GDP was falling way before anyone could fathom a pandemic. A contraction of almost 24% is the worst contraction India has ever faced in 4 decades in the April-June quarter.
The Indian economy had already entered into one of its worst diminishing phases ever. India’s GDP started plummeting in 2017-2018. GDP growth fell incessantly for eight quarters. It was 8.2% in March 2018 and had fallen even more to 3.1% in March 2020. The Lockdowns from March played a major role too in dwindling the GDP.
The deceleration currently is way worse than that of 2011-2012 one. In that phase, quarterly GDP growth fell from 10.3% in March 2011 to 4.9% in June 2012. Annual GDP growth fell from 8.5% in 2010-11 to 5.2% in 2011-12 Financial Year.
However, the economy recovered sharply and quickly after 2011-12. The 2011-2012 contraction was immediately followed by a major recovery and monstrous growth till 2016-17. However, from 2017 the GDP growth started declining heavily and hasn’t even once picked up pace since then. (Source: HindustanTimes) . Even before the world’s longest lockdown took place, a negative GDP growth, a major decrease in industrial output, fall in tax revenues, etc were all clearly observed and noted.
Financial services which are the largest contributor to the service sector reported a fall of 5.3 per cent in the last quarter. Hotels, Transportation, Communication and Trade took a painful hit and fell to 47 per cent. Manufacturing sank to 39.3 per cent, constructions fell to 50.3 per cent while electricity and gas, both saw a drop of a grim 7 per cent.
The only positive growth was reported in the agricultural sector. That specific sector grew to 3.4 per cent. (Source: NDTV)
Krishnamurthy Subramanian, the government’s chief economic adviser said, “The quarterly slump was largely expected and due to an “exogenous shock that has been felt globally. The economy is experiencing a V-shaped recovery.” We should expect better performance in subsequent quarters.” he said in statements distributed to reporters alluding to the easing of lockdown measures.
Unless the government doesn’t call for an increase in fiscal spending and other measures to battle with this significant and grim drop, The future of Indian citizens, as well as India as a whole, will plummet towards the deepest of the abyss.