GDP grew 3.1% in the three months of March, according to government data released on Friday. This was a faster pace than economists expected, but remains the weakest figure since the maintenance of comparable records began in 2012.
But more pain is coming for Asia’s third largest economy. Data for the first three months of the year do not fully capture the impact of a national blockade imposed in late March as authorities sought to stem the spread of the coronavirus pandemic.
The freeze led to a significant decline in activity, according to Shilan Shah, India’s senior economist at Capital Economics. In a research note published before the publication of GDP data, he said that “almost all economic indicators” have experienced the “most marked decline ever recorded”. Capital Economics had forecast a 1.5% contraction for the quarter.
Friday’s announcement comes a week after Shaktikanta Das, head of the Reserve Bank of India, warned that GDP would drop for the 2020-2021 fiscal year, which will end next March. The last time the Indian economy shrank over the course of a year was in 1979.
Das made the projection by announcing a series of new measures to support the suffering economy.
He announced that the central bank would cut its loan rate from 4.4% to 4%. The bank also extended a three-month debt moratorium that it offered to small and medium-sized businesses for another 90 days.
Das has not ruled out the possibility of introducing other measures as the pandemic develops.
Prime Minister Narendra Modi also said that the government was pledging $ 266 billion to support the economy, including steps to improve liquidity for businesses and a previous $ 23 billion stimulus package intended to help the poor of the country.
– Rishabh Madhavendra Pratap and Michelle Toh contributed to this report.