Is India’s GDP worser than the most covid effected countries?

Former Reserve Bank of India Governor Raghuram Rajan on Monday shared the India’s GDP data for the first quarter of financial year 2020-21 about its alarming figures and hinted the government and bureaucrats need to be vigilant on the issue.

On LinkedIn, Rajan, currently a professor at the University of Chicago, posted that India’s economy seem to be declining and GDP is worser than most Covid-affected advanced countries — the US and Italy.

The recently released quarterly GDP growth numbers for the first quarter of FY2020-21 should alarm us all. The 23.9% contraction in India (and the numbers will probably be worse when we get estimates of the damage in the informal sector) compares with a drop of 12.4% in Italy and 9.5% in the US, two of the most Covid-affected advanced economies,” he suggested.

India is even worse off than these comparisons suggest. The pandemic is still spreading rampantly in India. So, discretionary spending, especially on high-contact services like restaurants, and the associated employment, will stay low until the virus is contained.”, it read.

Raghuram suggested that government’s relief fund is crucial and it seem to be meagre. He opined that government want to conserve resources as it could be a possible stimulus. However this strategy is self defeating.

A variety of structures that help debtors and claimants such as landlords and banks need to restructure obligations including having unplayable written-offs. The world would recover earlier than India, so exports is a way for India to recover, the document read.