Bad news for India amidst the global pandemic. Indian economy contracted at the fastest rate on record in the year 2020 as there were lockdowns enforced in order to control and curb the spread of coronavirus. It, as a result, devastated consumer spending and investment.
The economy shrank rapidly by 23.9% in the three months ending in June, compared to the previous year. This collapse in the world’s fifth-largest economy and the previous fastest growing economy was actually worse than what economists had expected. It is one of the most severe shrinkages of any nation after the COVID 19 pandemic.
The investments were distorted by 47% compared with the previous year, while household consumption collapsed by nearly 27%, according to economists. Though government consumption was increased by 16% it wasn’t enough to counterbalance the sharp decline in commotion in other sectors.
Among the other growing countries, the U.S. economy shrank by 9.5 percent in the same quarter and Japan’s 7.6 percent. The Indian government said the maximum damage has been done to the construction, manufacturing, and transport industries.
“The strict lockdown led to a sharp contraction in activity in Q1 with job or income losses being faced by people,” said Aditi Nayar, an economist at ICRA, an investment and credit rating agency in New Delhi. “Less formal sectors could manifest in a deeper contraction when revised data is released subsequently.”
The only sector with hope, though relatively less, was agriculture. Due to strong rains this monsoon season, the sector grew 3.4 percent versus 3 percent in the previous quarter. But the sectors including trade, hotel, and transport dipped 47 percent. India’s once-mighty manufacturing industry shrank 39 percent.
India has registered more than 3.6 million cases of coronavirus, and approximately, 64,500 people have died from the disease. The numbers are rising rapidly: It took almost six months for India to record 1 million cases, another three weeks to hit 2 million, but only 16 more days to hit 3 million.