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Published on 5/09/2020 9:29:06 AM | Source: IANS

DEA cites `stringent` lockdown to justify massive GDP contraction

Posted in Top Stories| #Economy #GDP

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As earlier this week India reported a 23.9 per cent contraction in its GDP in the April-June quarter, much higher than it global peers, the Department of Economic Affairs (DEA) which comes under the Ministry of Finance has attributed the negative growth to the "stringent" lockdown in the country as compared to any other country in the world.

In its Monthly Economic Review for August, the DEA cited the Government Response Stringency Index measured by Oxford University to say that India had imposed "one of the most stringent lockdowns" to curb the spread of novel coronavirus.

The report said data now available for the April-June quarter confirms a significant world-wide year-on-year contraction of output resulting from the Covid-19 pandemic.

US economy has contracted by 9.1 per cent, UK, France, Spain, Italy and Germany by 21.7 per cent, 18.9 per cent, 22.1 per cent, 17.7 per cent and 11.3 per cent respectively with the overall Euro area contracting by 15.0 per cent and Japan has contracted by 9.9 per cent, it said.

"Relative to these advanced nations, India's GDP contraction at 23.9 per cent is slightly higher. The higher contraction has resulted from the stringent lockdown that India enforced in the April-June quarter. India enforced the most stringent lockdown as reflected in the Government ResponseStringency Index developed by Oxford University," it said.

The department further said that the lockdown has enabled India to restrain the pandemic-induced death rate to "one of the lowest" in the world. India's case fatality rate was at 1.78 per cent as on August 31 as compared to 3.04 per cent in US, 12.35 per cent in UK, 10.09 per cent in France, 1.89 per cent in Japan and 13.18 per cent in Italy.

Saying that India's 23.9 per cent decline in GDP during the quarter ended June is consistent with this effect of the lockdown, the monthly report added that the lockdown period gave a respite to ramp up the health and testing infrastructure in the country.

"Due to timely tracing, treatment and reporting, the number of people recovering from the virus is continuously rising and the active cases, as on date, are 21 per cent of the total cases in the country.This has enabled it to restrain its pandemic induced death rate to one of the lowest in the world," it said.

The 23.9 per cent contraction in the country' GDP during the last quarter has brought a lot of flak for the government from several quarters.

The Monthly Economic Review for August has also said that the worst is over now as the Indian economy is going through a V-shaped recovery.

DEA cited the uptick in manufacturing purchasing managers' index, auto sales, e-way bills among others to show that the country is witnessing a recovery.