The Indian economy took its worst knock in the April-June quarter, with real Gross Domestic Product (GDP) contracting 23.9 percent as the nationwide lockdown hurt businesses across the board. Construction activity fell more than 50 percent year-on-year, manufacturing 39 percent, services, including hotels and hospitality, were down 47 percent.
For the full year, many economists expect a double-digit contraction and a few don’t see the size of India’s real GDP coming back to 2019-20 levels till 2022-23.
But there are green shots of hope, with economic activity showing signs of picking up in the July-September quarter. In a signal that economy is slowly getting its mojo back, manufacturing activity has gathered steam and as a result so have goods and service tax collections.
Since the lockdown has been lifted, people have been going back to work and the latest unemployment numbers by CMIE also show encouraging trends. Some of these positive signs had rubbed off on the freight data too.
Economists across the board expect that notwithstanding the increasing Covid-19 cases nationwide and lockdowns by state governments, activity will continue rising. They however warn that the centre will have to come up with a stimulus package soon to provide the necessary healing to the economy and businesses crushed by the pandemic.
“Rising tractor sales and healthy monsoons suggests that kharif crop is expected to be above normal, implying robust rural demand in near future as well, also augurs well for upcoming Rabi sowing,” a government source said, explaining that robust rural demand in the near future will drive the overall consumption cycle.