oppn parties Fall In GDP Demands Monetary & Fiscal Measures

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  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
  • India has moved to the 40th spot in the innovation index, up 6 spots from last year
  • DGGI has alleged that top insurance companies, banks and NBFCs has committed a fraud of Rs 800cr by claiming input tax credit without underlying supplies
  • The Centre will borrow Rs 10000cr less than planned earlier due to good revenue collections
  • At $23.9bn, India's current account deficit widened to 2.8% in Q1, the worst in four years
  • Stocks continue to flounder on Thursday: Sensex sheds 188 points to 56409 and Nifty 40 points to 16818
  • The 36th National Games were declared open on Thusrday by PM Modi in front of a record crowd in Motera near Ahmedabad
  • Jasprit Bumrah most likely to miss T20 World Cup due to recurrence of back injury
  • PFI's political wing, the SDPI is on EC radar and action will follow soon if discrepancies are detected
  • Ashok Gehlot to meet Sonia Gandhi today, says all issues will be sorted out soon
  • Referring to the PFI ban, most Muslim organizations ask the government to take similar action against right wings organizations like the RSS, Bajrang Dal, VHP and the like
In a landmark order, Supreme Court rules that all women, married or unmarried, are entitled to safe and legal abortion up to 24 weeks of pregnancy as per the MTP Act
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Fall In GDP Demands Monetary & Fiscal Measures

By Ashwini Agarwal
First publised on 2020-09-02 08:29:37

Since the economy was almost completely locked down in April and most of May, and was only partially opened thereafter, it was expected that it will contract in a big way. But the figures that were announced by the National Statistics Office showed the rot to be deeper than what was estimated by experts. At 23.9 percent, the GDP has contracted enough to arouse fears of a deep recession and recovery will be slow. The core sector figures, which showed a further contraction in July, hint at another big nosedive in the second quarter.

Among individual sectors, construction suffered the worst, going down by 50.3%. This was mainly due to the double pressure of the lockdown as well as the paucity of workers when activities were allowed to resume. It is expected that the sector will pick up now as reverse migration has started happening in a big way because of low wages in the countryside and MNREGA. Manufacturing went down by 39.3% and trade, hotel, transport and communication by 47%. The only sector that showed a rise was agriculture, forestry and fishing which rose by 3.4% on the back of good monsoon rains and record acerage sown under Kharif crop. It also helped that fewer restrictions were placed on the sector in the lockdown.

Investments went down by 47.1% and gross fixed capital formation (GFCF) was down by 47%. The picture became gloomier as it was reported that the core sector had contracted a further 9.6% in July. This hints at another big fall in GDP in the second quarter. The only silver lining is that GST collection has not gone down much in August when compared to the collection in July (although the fall is 12% YoY), showing that factory orders and consumption is picking up, albeit slowly. The government will have to immediately take both monetary and fiscal measures to shore up the economy. It has to make massive investments in infrastructure to revive the core sectors and set off a chain reaction. If consumption does not rise substantially and soon, the downward slide will be difficult to arrest.