India’s Growth Slows to 3.1% as Virus Roils Economy

(Bloomberg) -- India’s economic growth slowed last quarter, just as the government began locking down a country of 1.3 billion people to contain the coronavirus pandemic.

Gross domestic product expanded 3.1% in the three months through March from a year ago, the Statistics Ministry said in a statement in New Delhi on Friday. That is slower than the 4.1% expansion in the previous quarter, while the median forecast in a Bloomberg survey of 37 economists was for a growth of 1.6%.

Growth was 4.2% in the fiscal year through March 2020, the Ministry said, a performance that was in line with the median estimate in a Bloomberg survey of economists. But that was slower than the 5% the government expected before the virus outbreak.

Key Insights

• The services sector, which accounts for 55% of GDP, was among the hardest hit by the lockdown restrictions imposed since March 25. Trade, hotels and transport grew 2.6% in the January-March quarter from a year ago, while financial services expanded 2.4%
• India was already in the midst of a protracted economic slowdown before the virus hit, as a festering crisis among shadow lenders depressed credit demand as well as spending in the consumption-driven economy
• Goldman Sachs Group Inc. sees a bigger knock to growth in the second quarter. It’s predicting a 45% decline in annualized quarter-on-quarter GDP, resulting in a record contraction of 5% for the full fiscal year through March 2021

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• Agriculture output expanded 5.9% last quarter from a year ago. Manufacturing shrank 1.4%
• Gross value added -- a key input of GDP that strips out taxes -- grew 3% in January-March quarter from a year ago, compared with an estimate of 1.8% in a Bloomberg survey
• The government announced a $277 billion package to help boost the economy, while the central bank has cut interest by a total 115 basis points so far this year
• To read more on the GDP data, click here

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