Why today\u2019s GDP numbers matter<\/a><\/b><\/p>\n\u201cWith the national lockdown measures being extended through all of April and May, and most states extending their own partial restrictions through all of June, the rural economy, government spending and essentials will likely be the only sectors mitigating some of the decline,\u201d he said.<\/p>\n
Data Gaps<\/b><\/p>\n
According to the Reserve Bank of India, transport services, hospitality, recreation and cultural activities are particularly affected in the $2.8 trillion economy. The shock to demand is so severe that \u201cit will take quite some time to mend and regain the pre-Covid-19 momentum,\u201d the RBI said in its annual report.<\/p>\n
What Bloomberg\u2019s Economists Say<\/b><\/p>\n
Our analysis shows some sectors of the economy — agriculture, information technology services and central government expenditure — recorded an year on year growth despite the disruptions due to the pandemic. These sectors have slightly ameliorated the negative impact of the lockdown, but the drop in GDP is still expected to be large and only marginally better than our earlier expectation.<\/p>\n
Abhishek Gupta, India economist<\/b><\/p>\n
In addition, there\u2019s a higher level of uncertainty around last quarter\u2019s data, given the lack of field surveys conducted by the statistics office during the lockdown, which led to incomplete inflation and industrial production reports in April and May. With activity in India\u2019s vast informal sector, which makes up almost half of the GDP, unlikely to be reported, output in the formal sector could be used as a proxy and overestimate growth.<\/p>\n
\u201cThe statistics office could announce GDP contraction of 17.5% year-on-year, which could subsequently be revised to a 25% contraction when the informal sector survey is available,\u201d said Pranjul Bhandari, chief India economist at HSBC Holdings Plc. in Mumbai.<\/p>\n
Weak Support<\/b><\/p>\n
The pandemic has caused historic GDP contractions in economies around the world. In India, the situation is made worse by limited fiscal support, leaving the onus on the central bank to provide the bulk of the stimulus. The RBI has cut interest rates by 115 basis points so far this year, boosted liquidity and transferred billions of rupees in dividends to the government. But with inflation above the central bank\u2019s target, it\u2019s probably reaching the end of its easing cycle, leaving little scope for more support.<\/p>\n
Economists expect growth to rebound to above 7% next year, mostly led by pent-up domestic demand, and a pickup in farming and exports. Yet, that\u2019s likely to fall short of the recovery that followed the global financial crisis more than a decade ago, when growth averaged 8.2% in the two fiscal years after the crisis, boosted by massive fiscal spending, monetary easing and a swift global rebound.<\/p>\n
The pandemic aside, India still has deep-rooted structural problems — from a struggling and weak banking sector to high public debt — which will divert government resources away from responding to the current crisis.<\/p>\n
\u201cWhat I am worried about is the structural fault lines that this extreme economic shock will expose over the longer term, and how many years it will take for the economy to get back where it was,\u201d said Shumita Sharma Deveshwar, an economist at TS Lombard based in Gurugram, near New Delhi.<\/p>\n
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Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Once the world\u2019s fastest-growing major economy, India is set to post the steepest quarterly decline in gross domestic product in Asia as it quickly becomes the global hotspot for coronavirus infections. With more than 65,000 new infections a day and total cases topping 3 million in a country of 1.3 […]<\/p>\n","protected":false},"author":1,"featured_media":18682,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[36],"tags":[],"class_list":["post-18681","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-business"],"jetpack_featured_media_url":"https:\/\/bengalnewstimes.com\/wp-content\/uploads\/2020\/08\/3b212fbc-eb21-11ea-8bd0-e81a49b765f6.jpg","_links":{"self":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/18681","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18681"}],"version-history":[{"count":0,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/18681\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/media\/18682"}],"wp:attachment":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18681"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18681"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18681"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}