GDP contracts by record 23.

9% in Q1

What is GDP?
GDP (Gross Domestic Product) is a measure of economic activity in a country.  It is the total
value of a country’s annual output of goods and services.

The National Statistical Office on Monday, 31 August 2020 released Gross Domestic Product
estimates for the first quarter of financial year 2020-21.

Indian GDP contracts by 23.9% in this quarter (April to June quarter).

The contraction reflects the severe impact of the COVID-19 lockdown

Economists are expecting that the GDP will not return to positive territory for six quarters.

Sector wise contraction:

Sector Contraction
Construction 50
Trade, hotels, transport and communication 47%
Manufacturing 39%
Mining and quarrying 23%
*Note: GVA (Gross Value Added) is the sum of a country’s GDP and net of subsidies and
taxes in the economy.

Reasons for the Contraction of GDP:

There are four engines of growth:

1. Consumptions
2. Investment
3. Government expenditure
4. Exports

Consumption which is the biggest engine of economic growth has fallen by 27%.
Investment by private sector businesses have fallen by 47%. It is the second biggest engine.
Government expenditure and net exports have increased but overall there is decrease of
approximately 24%.