The GDP data for the first quarter of the current financial year released on Monday has left no room for any complacency. Everyone knew that the figures would be declining but the decline would be 23.9 percent, hardly anyone would have thought.
Certainly, these figures are serious, but we are not the only economy to witness a decline in GDP. More or less, but almost all countries are experiencing a significant decline in the growth rate.
Experts say that the reason behind the poor data is direct that the nationwide lockdown has been in force for more than 68 days during this quarter, in which all the economic activity came to a standstill. The agricultural sector alone remained free from it.
The result is that while all the sectors are showing a decline, the agriculture sector has registered an increase. It grew by 3.4 percent this quarter, compared to a 2 percent increase in the same period of the previous financial year.
The question is how much growth of the agricultural sector alone will be able to support the economy. The second question related to this is that what can be the condition to recover from this terrible decline. To find the answer to both these questions, we find the formula that this decline cannot be considered a purely economic phenomenon.
Behind this is the decision of lockdown which was taken keeping in mind the protection against coronavirus. The immediate and temporary character of this disaster is the biggest foundation of our expectations.
It can be said that as the lockdown restrictions are removed, the health of the economy will improve. However, the matter is not so easy. It has to be kept in mind that during this period ie April to June, the figures for Private Final Consumption Expenditure (PFCE) fell by 54.3 percent as compared to a growth of 56.4 percent in the same period last year.
PFCE is considered to be an accurate measurement of households' consumption figures. If the lockdown has affected their decision to buy a car or TV, it is not just the current crisis. In any family, such decisions are taken keeping in mind the certainty or uncertainty of the future.
That is, the need is not just that any areas that can be opened should be opened as soon as possible. There is also a need to guarantee the work and wages of laborers and employees and to build confidence in them that their jobs will remain intact.
If most offices and factories are stopped from closing, then the contraction of the market will not drag much and India will be saved from the long recession.
Obviously, the crisis is very big in front of the country, but there is also a good thing that the rays of light have not stopped showing from the other end of the tunnel.