The GDP of the first quarter (March-July) of 2020-21 declined to minus (-) 23% percent in comparison with 5.2% in the same period last year. The unprecedented contraction of economy was largely due to restrictions of economic activities, imposed to curb the spread of Coronavirus.
However, the downfall in GDP has been a pre-Corona phenomenon. Following the 5.2% GDP in the first quarter of 2019-20, contraction continues in second quarter with GDP reaching to 4.5%. It improved marginally in third quarter to 4.7%, only to nosedive in fourth quarter to 3.1%. Given the virtual closure of businesses during most parts of the first quarter of this year, the economic figure was expected to plunge substantially; however the contraction of GDP to minus (-) 23% is shocking which is greater than any G-7 countries.
Crucially, the figure of decline has not taken into account the unorganized sector’s which was devastated in the lock down. Therefore, many observers have opined that the figure of contraction do not reflect the miseries that common people suffered during the period. Participating in a debate on NDTV, economists Arun Kumar pointed out that the GDP report is incomplete and many crucial data are awaited; therefore, the revised figure of the first quarter could dip as low as minus (-) 40%. However, Sunil Alag, the other panelist remained optimistic while contesting that the awaiting data of agriculture and manufacturing sectors will offset the missing figure.
The GDP data came on the day when Congress leader Rahul Gandhi alleged that the Central Government is conspiring against the unorganized sector, which had worked as a buffer zone for the country during the economic crisis of 2008. Releasing a video, the former Congress president alleged that policies of the Modi government, such as Demonetization, faulty GST and lock down were imposed with the motive of harming the unorganized sectors, on which more than 90% of countries jobs depends.
However, earlier the finance minister Nirmala Sitharaman maintained that there is little in the hand of government to do amidst what she called the ‘Act of god’ referring to the ongoing pandemic. She was speaking in a meeting of finance ministers of the states to sort out the controversy of compensation of GST.