India’s GDP contracts by record 23.9% in first quarter of FY2020

News Network
August 31, 2020

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Bengaluru, Aug 31: India’s economy contracted at its steepest pace of 23.9% in the June quarter as the pandemic lockdown dented consumer and business spending, putting pressure on the government and central bank for further stimulus and a rate cut.

The gross domestic product (GDP) data released on Monday showed consumer spending, private investments and exports all collapsed during the world’s strictest lockdown imposed in late March to combat the COVID-19 pandemic.

A Reuters poll of economists had forecast that GDP in the world’s fifth-largest economy will contract by 18.3% in the June quarter, compared with 3.1% growth in the previous quarter, the worst performance in at least eight years.

COMMENTARY

PRITHVIRAJ SRINIVAS, CHIEF ECONOMIST, AXIS CAPITAL, MUMBAI

“The June-quarter GDP growth number confirms that India’s national lockdown was the most severe and the deepest GDP decline among large countries.

“The gradual reversal of the lockdown since mid-April is likely to reduce the severity of GDP contraction in coming quarters. However, to erase the contraction fully we need to see an improved consumer sentiment.”

SHASHANK MENDIRATTA, ECONOMIST, IBM, NEW DELHI

“As expected, growth contracted sharply in the June quarter. Investment demand recorded a 47% decline, while private consumption recorded a contraction of nearly 20%. With a contraction of 20.6% y/y, service sector was a key drag on the growth.

“While the overall growth print witnessed the weakest decline on record, this also marks a bottom in our view. Our assessment is that investment will likely stay weak, while consumption activity is likely to improve in subsequent quarters. For a broader recovery, however, supportive policy will need to provide a push.”

ADITI NAYAR, PRINCIPAL ECONOMIST, ICRA, GURUGRAM

“The GDP and GVA plunged precipitously in the lockdown-ridden Q1 of FY2021, both printing similar to our forecast of a 25% contraction. Moreover, incoming data on the MSME and less-formal sectors could manifest in a deeper contraction when revised data is released subsequently. We maintain our forecast that the Indian economy will contract by 9.5% in FY2021.

“The wide discrepancy between the double-digit growth of the government’s final consumption expenditure and the contraction in public administration, defence and other services on the production side, is rather incongruous.”

SUVODEEP RAKSHIT, SENIOR ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI

“Real GDP growth at (-)23.9% in 1QFY21 was much lower than what the markets were expecting. The choice for the government will be on whether the consumption or the investment side needs to be pushed. Given the limited fiscal space and the need to stimulate a more durable growth, the growth recovery will be gradual and is likely to continue into 1HFY22.”

MADHAVI ARORA, LEAD ECONOMIST, FX AND RATES, EDELWEISS SECURITIES, MUMBAI

“The Q1 GDP growth print came in worse than our expectations of -18%. The surprise take-away elements were the better-than-expected performance of finance and real-estate sectors, and more pertinently, a sharp contraction in public administration (proxy for government spending) data. Nonetheless, it does little to change the broad contours of the growth trajectory.

“The sub-optimal policy response would only mean the downward cycle could stretch further, while structural constraints limit sustained secular growth pick-up ahead. We think the government will have to loosen its fiscal strings further in 2HFY21 if growth prospects remain weak.” SAKSHI GUPTA, SENIOR ECONOMIST, HDFC BANK, GURUGRAM”Given the lack of reporting due to the lockdown in Q1 (especially for the informal sector), we expect the GDP numbers to be revised down further in subsequent releases.

“Hopes of an economic recovery in the second half of the year have been pinned on a rural sector revival. However, with the virus spreading to the hinterland, the rural support might be lower than expected.

“In terms of the growth prints, Q1 is likely to be the worst print and it will be a very slow grind up from this bottom going forward. We continue to expect a -7.5% growth print for the year with a downward bias to our forecast.”

RAJANI SINHA, CHIEF ECONOMIST, KNIGHT FRANK INDIA, MUMBAI

“The sharp fall in the first-quarter GDP is on expected lines, given that around 70-80% of the economy was on a standstill in the first two months of this quarter.

“With the economy unlocking in the last few months, most economic parameters have improved to 70-90% level of the corresponding period of last year. However, a sustainable recovery would depend on the time taken to contain the spread of virus. Increased infrastructure investment by the government and demand-boosting measures are much required for the economy to recover.”

SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES, MUMBAI

“This kind of a decline was expected as there was a lockdown for roughly half of the quarter. The infrastructure data showed the decline was less than 10%, and with the exception of cement and steel, all other sectors have done reasonably well. “The Reserve Bank of India (RBI) won’t lose too much sleep on this number as it was expected. The RBI still has its focus on growth. This (GDP number) slightly improves chances of a rate cut in October. Unless the inflation comes below 5% in the next reading, the RBI still might postpone the rate cut to December.”

RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCIAL HOLDINGS, MUMBAI

“Contraction of real GDP at 23.9% appears to be underestimated, as data collection efforts were hit by the pandemic.

“The NSO had to use substitutes and proxies to estimate the losses of informal sector. So there is a very high probability that this data will undergo several revisions in the future. But broader trends are clearly visible.

“Unless the central and state governments focus on re-starting the economic machine completely, the real process of repair and reconstruction will not gain momentum. Unless this is given the top-most priority, India will get trapped with the unsustainable debt burden.”

UPASNA BHARDWAJ, SENIOR ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI

“After a record contraction in Q1, we expect the following quarters to normalise registering a much slower fall. The high-frequency data since June has been suggesting a significant pickup in activity. Nonetheless, the weakness in demand is expected to weigh across all sectors and some policy support will be necessary to cushion any further deterioration.

“We expect some kind of stimulus from the government in the coming few months. The recent policy measures from the RBI will help cap any sharp upside risks to bond yields in case of any incremental supply.”

SIDDHARTHA SANYAL, CHIEF ECONOMIST AND HEAD OF RESEARCH, BANDHAN BANK, KOLKATA

“The GDP contraction of nearly 24% y/y during Q1 FY21 was clearly sharper than expected. Also, given the lack of clarity about whether the disruption in informal sector activities were captured adequately, the possibility of further worsening of Q1 FY21 GDP estimate during subsequent rounds of revisions cannot be ruled out. Overall, GDP looks set to record near double-digit contraction during FY21.

“However, rural activities seem to be relatively more resilient at the moment and might benefit from the government’s rural-focused employment schemes. Given the recent uptick in CPI prints, it seems that the RBI may not be in a position to cut rates in the near-future.”

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News Network
March 28,2025

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A 7.7 magnitude earthquake, and an aftershock of 6.8, hit central Myanmar at 12.50pm (local time) Friday. The epicentre was 16km northwest of the city of Sagaing, and at a depth of 10km, the United States Geological Survey said. 20 deaths have been reported - in Myanmar so far - by local media.

Deaths have also been reported from a mosque in Mandalay city, which collapsed while people were inside, praying and a university building in which a fire broke out. And a 1,000-bed hospital in Myanmar capital Naypyidaw has become a "mass casualty area", news agency AFP said.

The Myanmar junta has declared an 'emergency' and has appealed for international aid.

Tremors were felt as far away as northern Thailand, where some metro and rail services were suspended in Bangkok. Thai Prime Minister Paetongtarn Shinawatra is holding an "urgent meeting" to review the crisis and she too has declared a state of 'emergency' in the capital city.

China's Yunnan province also reported strong tremors; the China Earthquake Networks Center said the magnitude was 7.9. And mild tremors were also reported from Kolkata in Bengal and parts of Manipur, where tremors of 4.4 magnitude were recorded as well as Dhaka and Chattogram in Bangladesh.

Prime Minister Narendra Modi has said India is ready to offer any assistance needed. "Praying for the safety and wellbeing of everyone," he posted on X. "... have asked our authorities to be on standby."

Terrifying videos on X showed buildings shaking in Bangkok and other cities, with people running onto the streets in panic. "I heard it... I was sleeping in the house and then I ran as far as I could in my pyjamas out of the building," Duangjai, a resident of popular tourist city Chiang Mai, told AFP.

One particularly horrifying video showed water from an infinity pool falling over the edge.

And another showed an under-construction skyscraper in Bangkok's Chatuchak neighbourhood collapsing. According to reports, 43 workers have been trapped amid the debris.

"When I arrived to inspect the site, I heard people calling for help, saying help me," Worapat Sukthai, deputy police chief of Bang Sue district, told AFP. "We estimate that hundreds of people are injured but we are still determining the number of casualties."

In Myanmar, an old bridge over the Irrawaddy River and some residential buildings having collapsed, with images from Mandalay (around 24km from Sagaing) suggesting more people may be trapped.

Other videos showed extensive damage to the airport in Mandalay and to a monastery near the city of Taunggyi, in Myanmar's Shan State that is on the border to Thailand.

Earthquakes are relatively common in Myanmar, where six strong quakes of 7.0 magnitude or more struck between 1930 and 1956 near the Sagaing Fault, which runs north to south through the country.

A powerful 6.8-magnitude earthquake, in the ancient capital Bagan in central Myanmar, killed three people in 2016, also toppling spires and crumbling temple walls at the tourist destination.

The impoverished nation has a strained medical system, especially in its rural states.

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News Network
March 27,2025

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The Karnataka government has announced that Nandini milk will become ₹4 costlier per litre starting April 1, 2025. This is the second price hike this year.

The decision was made during a cabinet meeting led by Chief Minister Siddaramaiah. Karnataka Cooperation Minister K N Rajanna and Animal Husbandry Minister K Venkatesh said the increase is meant to support dairy farmers by covering the rising costs of producing and processing milk.

Officials also said that:

>> The extra money from the price hike will go directly to the milk producers.

>> The earlier ₹2 price hike (announced on June 26, 2024) will be withdrawn.

>> The new price hike of ₹4 will apply to both 500 ml and 1-litre packets.

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coastaldigest.com news network
March 20,2025

Mangaluru International Airport (MIA), Karnataka’s second busiest airport, has seen 148.5kg of gold smuggled between 2019 and December 2024, with 90% arriving from the UAE. Customs officials recorded 346 cases, averaging 30kg of gold seized per year (2.5kg per month). Most smugglers are from Kerala and Bhatkal.

A senior customs officer revealed that MIA sees at least five gold smuggling cases per month. Numbers dropped during the pandemic but surged after flights resumed. Many offenders are first-time carriers, while some are habitual smugglers. With fewer flights, customs thoroughly checks passengers, making smuggling harder.

Smugglers constantly innovate concealment methods. Hiding gold in the rectum remains common, but gold is also found in trolley bags, mobile covers, chocolate boxes, milk powder, biscuit packets, and clothing layers. Electronic devices like car speaker magnets, LED bulbs, AirPods, wristwatches, and ballpoint pens have been used.

Unusual tactics include hiding gold in a woman’s hairband, a baby’s diaper, and even a kheer mix packet (347g). In one case, a passenger attempted to smuggle 100g in his mouth under a mask but was caught.

Officials note that while the UAE remains a key source, smugglers now bring gold from other Gulf countries, continuously adapting to evade detection.

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