The Measure Of A Lockdown

In responding to the Covid-19 pandemic, India imposed one of the most stringent lockdowns anywhere in the world, beginning March 25. “Jaan hai to jahaan hai (life before anything else),” Prime Minister Narendra Modi famously said, rationalizing the total lockdown. But the economy, which was already in the midst of a slowdown, paid a very heavy price. Much has been said and written on the economic consequences of the controversial decision, and now the GDP data for the April-June quarter shows the full extent of the damage caused—the economy shrank 23.9 per cent in that period. The manufacturing sector collapsed by 39.3 per cent, while construction activity fell by 50.3 per cent. The trade, hotels, transport, and communications sector shrank by 47 per cent, with investment activity declining by 47.1 per cent. However, government consumption expenditure grew by 16.4 per cent.

- Shwweta Punj

According to an estimate by former finance secretary Subhash Chandra Garg, India lost Rs 12.5 lakh crore worth of output in the first quarter of the financial year. While the government suffered a loss of Rs 2.5 lakh crore, Indian companies could have lost another Rs 2.5 lakh crore. The remaining Rs 7.5 lakh crore is the loss in income that includes wages and salaries. Several economists predict that the revised estimates for this period will be even worse since the data just published does not capture the impact on the informal economy. The Central Statistics Office, which publishes national economic data, typically uses formal sector indicators as proxies for data from the informal sector.