India’s gross domestic product or GDP slips 23.9 per cent in the April-June period – much worse than economists’ estimates, official data showed .That marked the worst incidence of negative growth for the economy .
Meanwhile govt released tax collection data shows sharp decline in govt income which will have more pressure on treasury. Data shows The Government of India has received Rs. 2,32,860 crore (10.4% of corresponding BE 2020-21 of Total Receipts) upto July, 2020 comprising Rs. 2,02,788 crore Tax Revenue (Net to Centre), Rs. 24,614 crore of Non Tax Revenue and Rs.5,458 crore of Non Debt Capital Receipts. Non Debt Capital Receipts consists of Recovery of Loans (Rs. 5,455 crore) and Disinvestment proceeds (Rs. 3 crore)
Rs. 1,76,009 crore has been transferred to State Governments as Devolution of Share of Taxes by Government of India upto this period which is Rs. 23,903 crore lower than the previous year.
Total Expenditure incurred by Government of India is Rs. 10,54,209 crore (34.65% of corresponding BE 2020-21), out of which Rs. 9,42,360 crore is on Revenue Account and Rs. 1,11,849 crore is on Capital Account. Out of the Total Revenue Expenditure, Rs.1,98,584 crore is on account of Interest Payments and Rs.1,04,638 crore is on account of Major Subsidies.
Govt data marks the likely onset of India’s deepest recession on record, which is widely expected to run through the second half of the fiscal year, as the rapid spread of the pandemic continues to weigh on demand, hindering a pickup in economic activity. Typically, recession is defined as two consecutive quarters of decreasing GDP.
In financial services – the biggest component of the country’s services sector, GDP shrank 5.3 per cent compared to the corresponding period a year ago. In manufacturing and construction, it fell 39.3 per cent and 50.3 per cent respectively. Agriculture bucked the trend, with an expansion of 3.4 per cent.
Though the coronavirus-related restrictions have been gradually lifted, there has been an impact on the economic activities as well as on the data collection mechanisms, the government’s statistics office said. Challenges related to other underlying macroeconomic indicators such as industrial production and consumer inflation will also have implications on these estimates, it said, mentioning likely revisions “in due course”.
The data comes as the government is strategically removing restrictions imposed in March to curb COVID-19 infections, which have caused thousands of job losses and forced the majority of workforce to stay indoors, leading to a big blow to an already-slowing economy.
Chief Economic Adviser Krishnamurthy Subramanian said, “India was in a lockdown all through April to June quarter with majority of economic activities being restricted. So this trend is along expected lines… Core sector output is clearly showing a V-shaped recovery.”
COVID-19 is spreading faster in India than anywhere else in the world, as daily tallies have exceeded those of the US and Brazil for almost two weeks. India currently has more than 3.54 million cases, and 63,498 deaths.