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AUGUST 21, 2020 | The Indian Eye india’s gdp to shRink
By 20% in fiRst QuaRteR
online food delivery industry recovered 75-80% of its sales; raw material consumption fell by almost 50%
| Business EYE |
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Our Bureau
NI e w D e l h i
ndia’s GDP is likely to con- tract by 20 per cent during the first quarter of the cur-
rent fiscal on account of the COVID-19 pandemic-induced disruptions, Care Ratings said. The Central Statistics Office (CSO) will release the gross domestic product (GDP) data for the first quarter of FY21 on August 31, which is expected to statistically mirror the adverse impact of the pandemic led lockdown on economic growth.
“notwithstanding the fact that considerable uncer- tainty prevails regarding the quarterly economic performance, taking cog- nizance of the adverse impact of lockdown we are pegging the real gdp growth at (-) 20 per cent yoy for Q1 fy21,” the rating agency said in a report.
The agency said disruptions caused by the countrywide lock- down crippled most economic and commercial activities across the country as has been depict- ed by various high frequency in- dicators slipping into red during these months.
Although the government had exempted certain select ac-
tivities pertaining to agriculture, banking including NBFCs and HFCs, construction activities in rural areas from lockdown re- strictions, these activities have remained muted due to labor shortages and other operational issues.
It said the industry is likely to witness a steep de-growth of 35.9 per cent year-on-year in the June quarter. Services sector may contract by 16.8 per cent, but increase in government ex- penditure will provide modest support, the report said.
Increase in spending on pub- lic administration by the govern- ment following announcement of stimulus measures is expect- ed to drive growth in the sector
in Q1 FY21, it said.
On demand side, the rating
agency said investment scenario has been dwindling with lower capacity utilization (below 70 per cent).
Private sector consumption remained below par as a side ef- fect of lockdown. Exports have contracted by a considerable 37 per cent in Q1 FY21 due to muted demand in global mar- kets and trade restrictions im- posed by certain countries due to the pandemic.
Raw material consumption at Pune-based manufacturing firms fell between 50-70% in the quarter ended June as com- pared to the preceding quarter or the same period a year ago.
Raw material consumption ac- counts for about 40-50% of a company’s total expenses in any given period. In Pune, the top 11 manufacturing firms spent a cumulative Rs 3,427 crore in the quarter ended June 2020 against Rs 8,886 crore in the preceding quarter and Rs 9,835 crore in the year-ago quarter. The man- ufacturing activity of these firms span vehicles to engines, gener- ators and spare parts.
Company executives said the trend showed the extent of the impact and how far it will stretch into the next two quar- ters, even as stocks have recov- ered and some green shoots were being seen with progres-
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