India’s GDP contracted by 23.9 percent in the first quarter of the fiscal. The farm sector was the only segment that saw growth of 3.4 percent; while others including manufacturing contracted nearly 40 percent; construction by 50 percent and trade, hotels and transport — the largest segment in services — contracted by 47 percent.
From the expenditure side, private final consumption expenditure contracted by 27 percent; while capital formation was down by 53 percent; government expenditure which is up at 16 percent is the only bulwark for the economy.
But what and how much can the government do to revive economic growth? And is the economy likely to turn around any time soon? To get answers for these questions, Latha Venkatesh spoke to Sonal Varma, Chief India Economist at Nomura, Soumya Kanti Ghosh Group Chief Economic Advisor at State Bank of India, Pronab Sen Former Chief Statistician and Sudipto Mundle Distinguished Fellow at NCAER and Acting Chairman at National Statistical Commission.
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