India’s economy contracted by an annualized 23.9 percent in the quarter ending in June, when Prime Minister Narendra Modi imposed a draconian coronavirus lockdown. The gross domestic product contraction was far deeper than most analysts’ forecasts and highlighted the severity of India’s initial strategy to contain the Covid-19 pandemic, which involved forcing businesses to shut down overnight and led to an estimated 140m job losses.
The Indian government’s fiscal response to the crisis was also criticized as failing to hand out enough money to those whose incomes collapsed because of the government restrictions. “This confirms what we have been saying for a long time – India’s lockdown was the harshest and inflicted a huge economic cost,” says Priyanka Kishore, head of India and South East Asia Economics at Oxford Economics. “This GDP data confirms the extent of the cost .”
Naushad Forbes, chairman of engineering company Forbes Marshall, called the GDP data “the worst performance in our history.” While lockdown hit the economy, it failed to stop the spread of the pathogen among the 1.4bn Indians. The country is detecting more new coronavirus cases than any other – with about 79,500 infections confirmed in the past 24 hours.
At the current pace, India is expected to soon surpass Brazil in terms of cumulative Covid-19 cases, second only to the US. The official death toll stands at 65,000 and includes Pranab Mukherjee, the 84-year-old former president and former finance minister, who died on Monday evening. As a comparison, the pandemic has claimed more than 183,000 lives in the US and more than 120,000 in Brazil.
The Indian economy was faltering before the pandemic, with GDP decelerating for four consecutive years. GDP expanded a mere 3.1 percent in the first quarter of 2020, on an annualized basis.
But India’s coronavirus lockdown, imposed on March 24, has been devastating. In the April to June quarter, private consumption contracted 27 percent year on year, and investment declined 47.5 percent.