NEW DELHI -- India's economy grew 3.1% in the January-to-March quarter, official data released Friday showed, as the coronavirus pandemic and the nationwide lockdown to curb its spread hit consumers and a broad range of industries.
Growth in the country's gross domestic product, the slowest since the January-to-March quarter of 2009, beat market expectations. The State Bank of India, country's largest state-owned commercial bank, forecast 1.2% for the quarter, while a Reuters poll predicted an expansion of 2.1%. The growth rate of the previous three months ended December was revised down to 4.1%, from the previously announced 4.7%.
For the entire financial year ended March, the economy expanded by 4.2%, which was also an 11-year low, and down from 6.1% the previous year.
In the March quarter, private consumption grew just 2.7% on the year, while gross fixed capital formation -- combined public and private investment -- shrank 6.5%.
India's lockdown, the world's largest and one of the most stringent, impacting the country's more than 1.3 billion people, came into force on March 25. It was initially scheduled to last three weeks but has been extended three times through May 31.
It is still unclear whether Prime Minister Narendra Modi's government will extend the lockdown again, although it has severely jolted an already slowing economy and put over 120 million people out of jobs according to a recent estimate by the Centre for Monitoring Indian Economy.
Economists forecast a further slowdown after the current quarter ending in June, due to the lockdown. Goldman Sachs said in a recent report that India's economy is likely to contract by 5% for the current financial year through March 2021.
On Friday, India reported its biggest single-day rise in coronavirus infections, with 7,466 new cases over the past 24 hours, bringing the total to 165,799. That includes 4,706 deaths, up 175 during the same period.
"Although the lockdown started on March 25, pressure points were already visible [in] the service sector, especially ... transport, tourism and hospitality, and a lot of cancellations [of bookings] have been happening from mid-February," said N.R. Bhanumurthy, a professor at the National Institute of Public Finance and Policy in New Delhi. "More worries are going to [be there] in the first quarter of the current financial year," he said.
In an effort to revive the economy, which was slumping even before it was battered by the lockdown, Modi, on May 12, unveiled a stimulus package worth more than 20 trillion rupees ($265 billion), equivalent to 10% of India's GDP. The move, Modi said, was aimed at helping small businesses, laborers, farmers and middle-income earners. Analysts, however, said it would not do much to lift the economy immediately.
According to an SBI research report published Tuesday, there was an estimated loss of at least 1.4 trillion rupees during the last seven days of March alone, due to the complete suspension of economic activity. It predicts GDP will plummet 6.8% in the current fiscal year that began in April.
Crisil Research, which forecasts the economy will shrink 5% this financial year, said in a recent note that about 10% of GDP in real terms could be permanently lost, adding that a return to the growth rates seen before the pandemic is unlikely within the next three financial years.
In the past 69 years, India's economy has contracted for the full year only three times, based on available data: in fiscal 1958, 1966 and 1980, Crisil said. It added that the recession likely this year, which would be the fourth since independence from Britain in 1947, "is perhaps the worst to date."