GDP growth falls to 3.1% in Q4 as Covid takes its toll

♦ FY20 GDP growth lowest since 2008-09

♦ Q3FY20 growth revised down to 4.1%

♦ Construction GVA contracts 2.2% in Q4

♦ Agriculture, mining the bright spots

New Delhi: India's economic growth tumbled to 3.1 per cent in the March quarter -- the slowest pace since the global financial crisis more than a decade back -- but the worst is yet to come as the full impact of the world's most expansive lockdown that brought the nation to a near standstill will get fully accounted for only in the next quarter.

The government began locking down Asia's third-biggest economy only towards the end of the March quarter to contain the spread of the coronavirus pandemic.

The arduous lockdown, imposed on March 25, has already been extended thrice, with some relaxations beginning early this month.

Manufacturing contracted 1.4 per cent in the last quarter of 2019-20 fiscal (April 2019 to March 2020) while construction plunged 2.2 per cent.

Agriculture grew by an impressive 5.9 per cent, the Ministry of Statistics and Programme Implementation said, adding the GDP estimates were "based on available data" and are likely to undergo revision.

The Indian economy grew by 4.2 per cent in 2019-20 fiscal, the slowest in 11 years, after downward revision of growth rates for each of the previous three quarters.

The growth rate in FY20 is slower than the 5 per cent the government expected before the virus outbreak.

International credit rating agencies S&P Global and Fitch Ratings as well as some economists expect the fiscal year that began in April to see the worst economic contraction in four decades, with GDP shrinking by a record 5 per cent.

India was already in the midst of a protracted economic slowdown before the virus hit due to a festering crisis among shadow lenders and on declining consumer demand and private investment.

The Indian economy had grown by 6.1 per cent in FY19. The services sector accounts, which accounts for 55 per cent of gross domestic product (GDP), and manufacturing has been severely crippled by the lockdown, causing ripple effects on jobs and economic growth.

Fiscal deficit -- the shortfall in a government's income compared with its spending -- came in at 4.59 per cent of GDP for FY20, as compared to the budgetary target of 3.8 per cent.

Commenting on the GDP numbers, Rumki Majumdar, Economist, Deloitte India, said growth in the last quarter of FY20 has been the slowest since the global financial crisis more than a decade ago.

"If one may recollect, economic activities were showing signs of traction in early 2020. India's industrial production for the first two months suggested that green shoots were appearing in industrial activities.

In other words, a large part of the slowdown that we see in the January-March quarter may have happened primarily in the second half of March, which is when COVID-19 started spreading aggressively in India forcing the government to take immediate actions to contain the spread," she said.