NEW DELHI: The real depth of the sinkhole India’s economy has plunged into came from three separate sets of data on Friday — growth slipped to an 11-year-low of 4.2% for the financial year ending March 31; fiscal deficit climbed to 4.6%, way above the revised target of 3.8%; and core sector growth in April contracted by a whopping 38%, when the country was under full lockdown.
“In view of nationwide lockdown during April 2020 due to COVID-19 pandemic, various industries — coal, cement, steel, natural gas, refinery, crude oil etc experienced a substantial loss of production,” the commerce ministry said in a statement.
The core industries comprise more than 40% of the Index of Industry Production (IIP).
The numbers are worrying though not surprising, as experts have already said the worst impact of slowdown will be visible in the April to June quarter. Goldman Sachs had predicted that the Indian economy will contract by as much as 45% in the first quarter of the current year.
“This picture would be replicated in May too though not to this extent. IIP growth, too, would be in a similar range most probably given the high weight of these industries in the index,” said Madan Sabnavis, Chief Economist, Care Ratings said.
As for GDP growth, it slipped to 3.1% in the January-March quarter of 2019-20, dragging the growth for the whole fiscal year 4.2%, way below the government estimate of 5%. Defending the numbers, finance ministry officials said slowing down of business and exports had started since January.
More worrying is the fiscal deficit, which has gone up to 4.6%, mainly due to poor revenue collection.
Data released by the Controller General of Accounts showed fiscal deficit at Rs 9.36 lakh crore in 2019-20 as against the revised estimate of Rs 7.67 lakh crore, as tax revenues fell short by nearly Rs 1.5 lakh crore from the revised estimates.
