No economy is untouched with the impact of COVID-19. India is no expectation. While some countries were able to reduce the impact, India does not enjoy the same privilege as it went under complete lockdown and among other things.
That 23.9 per cent contraction of the Indian economy does not surprise many. But the only surprise was when a data suggested that India‘s GDP contraction is more than the United States.
There has been data that is circulated that compares the quarter on quarter data of some countries and year on year data of other countries. But the point of the data is to show the contraction in the economy due to COVID-19.
On Twitter, many took to express their view on this data. While many felt this is the wrong way of calculating, many defended the data.
Speaking to The Free Press Journal, Care Ratings, Chief Economist, Madan Sabnavis, said, “This data is just to understand what is happening in the world economies. One should not forget that the United States (US) was not under complete lockdown, unlike India. The United States is a developed country whereas India is a developing country. Like the US, India cannot do cash transfers and payouts.” There are a lot of factors that come into play which includes population and resources. The US government agency data stated the country witnessed 9.5 per cent actual contraction between April and June; and 32.9 per cent annualised rate of contraction.
Yet another factor is that the data sample is not standard as this was prepared by comparing the details that are out there in the public domain.
While this double-digit contraction will be hurting the Indian populace, the reality is that similar double-digit contraction is expected in the second quarter of 2021-2020. Sabnavis said, “ Coming quarter as well, there will be a double-digit contraction.”
In the recent Care Rating reports, it was stated, “Although the higher growth in the agriculture sector and consequently rural demand would support the domestic economy it would however not be sufficient to compensate for the decline in urban demand and growth. We project the country’s GDP to contract by around 6.4-6.5 per cent in FY21.”