India Q4 GDP Growth to Fall due to Lockdown

The COVID-19 pandemic has taken a toll on the Indian economy which get reflects with the diminishing India Q4 GDP Growth. The Lockdown, which was imposed on 25th March 2020 in India, multiple sectors has now almost brought the operations in the key sectors to halt.

The lockdown has given a huge blow to the key 8 infrastructure sectors. Based on the data released by the govt, India’s GDP Growth rate in 2020 is now shrinking. The Cement industry goes down by 86%, whereas fertilizers and crude oil shrank by 4.5% & 6.4%.

Economists have analyzed and stated that worse situation is yet to come, which flagging a recession along with the GDP rate of India in 2020 and expected to restrain in first two quarters of the current financial year with the allotted lockdown of the past three months.

To be on the safer side, some business has resumed its operation on a smaller scale. They switched the nature of their work to manufacturing health essentials in this pandemic. However, a major part of the economy is on a standstill, which affects the GDP rate of India in 2020.

Diminishing India Q4 GDP Growth

Growth of GDP strengthened by 3.1% in the last quarter as the data shared by the government. Since the lockdown, it has gone slowest to a 0.2% rise in India Q4 GDP growth of FY 2019-20. Growth calculation for the past three quarters is mentioned below-

• 4.1% from 4.7% in the quarter ending December 2019
• 4.4% from 5.1% in the quarter of July to September 2019
• 5.2% from 5.6% in the quarter of June 2019

In a poll conducted by ET, the independent economists foresaw GDP growth for match quarter at 0.5% to 3.6%, and that is of FY20 at 4% to 4.7%. Those figures were anticipated to be rewritten downward as the calculations were based on incomplete data.

Broad-Based India Q4 GDP growth Slowdown

The manufacturing sector’s GDP shrank to 1.4% in the Q4 as factories were shut down at the end of March 2020. 

• Surprisingly public administration and agriculture grew up to 5.9% and 10.1% simultaneously. 
• The growth in the construction sector also limited to 2.2%.
• The financial sector that is considered as the fastest growing sector shows a hike of only 2.4%. 
• Unfortunately, an indicator of investment and Gross Fixed Capital Formation (GFCF) shrank to 6.4% in the ending of a financial year.

Atmanirbhar Bharat: A Remedy against slow India Q4 GDP growth

The government has eventually eased the restrictions in some sectors. It is expected that further wave of infection derailed the probability of a comeback. Additionally, the government has divulged a relief package of INR 20 lakh crore, called the Atmanirbhar Bharat, which comprises liquidity criteria taken by (RBI) Reserve Bank Of India to contradict the consequence of lockdown. RBI provides liquidity backing and other regulatory relief and yet cut rates twofold to file low. Though some experts stated that standards would not help to stimulate demand besides India’s GDP growth rate in 2020.

In the Atmanirbhar Bharat Package, the government has also introduced Reforms in 8 Key sectors of Economy.

It is hoped that the ongoing efforts of the government are going to revive the economy very soon.