Boosting Growth: Leaving Much To Be Desired

The prolonged lockdown caused by the COVID-19 pandemic has led to the further worsening of the Indian economy, which was already suffering from a lacklustre performance prior to the lockdown. Considering the severity of the lockdown, the persistence of the poor economic performance consecutively two quarters in a row is an obvious outcome. In fact, the official numbers understate the economic malaise.

According to the recent press release of the National Statistical Office (NSO) (dated 27 November 2020), the real gross domestic product (GDP), the measure of national income in the country, has contracted by 7.5% in the second quarter (Q2, July–August) of 2020–21, but the rate of contraction is considerably lower than (-)23.9% recorded in the previous quarter (Q1, April–June). In 2019–20, real GDP grew at 5.2% and 4.4% in Q1 and Q2, respectively. During the first half (H1, April–September) of 2020–21, the economy contracted by 15.7%, compared to the growth rate of 4.8% during the corresponding period of the previous year. With COVID-19 restrictions being gradually relaxed since June 2020, some recovery is expected in Q2 but by itself leaves no room for complacency.