Former Finance Minister P Chidambaram on Tuesday pointed out that even though India’s Gross Domestic Product registered a 20.1% growth rate in the first quarter (April-June) of this financial year, the economy was yet to recover.
“In Q1 [first quarter] of 2021-22, GDP was Rs 32,38,828 crore which is still below the Q1 level of 2019-20 which was Rs 35,66,788 crore,” the senior Congress leader tweeted.
India’s growth rate, which was already slowing down before the pandemic struck, slumped to unprecedented lows last year as economic activity in the country stalled due to a nationwide lockdown. For the financial year 2020-’21, the Indian economy contracted by 7.3%, the sharpest annual decline in growth rate ever.
On Tuesday, Chidambaram said that sectors such as mining, manufacturing, construction, hotels and transport and financial services were yet to attain pre-pandemic levels of quarterly output.
Earlier on Tuesday evening, government data showed that the economy had grown by 20.1% in the April-June period compared to the corresponding quarter last year. The number marked the fastest rate of growth in India in a quarter. However, it came as an effect of a low base of an unprecedented contraction of 24.4% in the economy in the first quarter of the previous financial year.
Economic data like GDP growth rate are calculated on a year-on-year basis. So, a low growth rate in the previous year leads to a low base for the current year’s numbers.
In a separate set of tweets, Chidambaram highlighted this as well.
Other economists and experts also chose to look beyond the headline number for GDP growth rate. Parag Kar, vice president of government affairs at Qualcomm, pointed out that the size of India’s economy in the first quarter was in fact smaller than the corresponding period four years ago.
Aditi Nayar, chief economist at ratings agency ICRA, said that the economy had slowed down 16.9% compared to the fourth quarter (January-March) of the previous financial year, BloombergQuint reported.
Radhika Rao, economist at the DBS Bank, also said that the impact of the second wave of coronavirus was better reflected in the quarter-on-quarter contraction in economy.
The data released by the Ministry of Statistics and Programme Implementation also showed that the country’s GDP in the April-June quarter of this financial year rose by Rs 51.2 lakh crore. It had grown by Rs 56.8 lakh crore in the fourth quarter of the previous fiscal.
Sreejith Balasubramanian, economist at financial services firm IDFC AMC, said that the vaccination process against coronavirus will be crucial for the growth trajectory going forward, Reuters reported.