GDP increased by 3.1% in the three months to March, according to government data published Friday. That is a step faster than economists had predicted, but still the weakest number since comparable records began in 2012.
But more pain is on its way to Asia’s third largest economy. Data for the first three months of the year did not fully capture the impact of national lockdown imposed at the end of March as authorities sought to stem the spread of the coronavirus pandemic.
The lockdown has caused a significant decline in activity, according to Shilan Shah, senior Indian economist at Capital Economics. He said in a research note published before the GDP data was released that “almost every economic indicator” had experienced the “steepest decline on record.” Capital Economics has forecast a 1.5% contraction for the quarter.
Friday’s announcement came a week after Reserve Bank of India chief Shaktikanta Das warned that GDP would fall for the fiscal year 2020-2021, which ends next March. The last time the Indian economy had shrunk for a year was in 1979.
Das made a projection while announcing a number of new steps to prop up an ailing economy.
He announced that the central bank would cut lending rates from 4.4% to 4%. The bank also extended the three-month debt moratorium it offered to small and medium businesses for 90 days.
Das does not rule out the possibility of introducing other measures as the pandemic develops.
Prime Minister Narendra Modi also said the government committed $ 266 billion to support the economy, including measures to increase liquidity for businesses and a previous stimulus package of $ 23 billion intended to help poor countries.
– Rishabh Madhavendra Pratap and Michelle Toh contributed to this report.
