India’s GDP growth suffers worst-ever crash: Road ahead for the Indian economy

India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9 per cent as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment.

The GDP contraction in the world's fifth-largest economy compared with 3.1 per cent growth in the preceding January-March quarter and 5.2 per cent expansion in the same period a year back, according to official data released on Monday.

This is the sharpest contraction since quarterly figures started being published in 1996 and worse than what was expected by most analysts.

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What is the reason behind this kind of economic carnage?

Mostof India and the world went into a severe lockdown in the April to June period. Most economic and business activity came to a halt.

In May — India had announced a 266 billion dollars stimulus package. Free food to the weak and poor. Jobs for migrant workers. Credit guarantees on bank loans and, relief to small businesses.

But, that has not helped cushion the fall. The economy is still crawling out of the lockdown.

Finance minister — Nirmala Sitharaman had seen this coming. Just a few days ago — she said and I quote.

You are facing an ‘act of god’ which might even result in a contraction of the economy. So, here it is — Indian economy's worst contraction on record.

However, it was not just India’s worst-ever quarter. Some of the world's largest economies have not been able to bear the brunt of the pandemic. In the April to June period the US economy contracted by 32.9 percent.

The United Kingdom by 20.4 per cent, Japan by 27.8 percent.

Road ahead for the Indian economy

The chief economic advisor — Krishnamurthy Subramanian — expects a recovery once India comes completely out of lockdown.

But, he also expects the uncertainty to remain until the pandemic is completely brought under control.

India has finally lifted inter-state movement of vehicles. As goods and services move across the country freely — the Indian economy should begin its upward climb.

But this will be a tough climb. India’s woes won't end in a hurry. The economy is expected to contract by 6 percent in 2020.