According to Motilal Oswal Research, Economic Activity Index (EAI) for India's real GVA (called EAI-GVA) contracted 7.0% YoY in Jun-20 – its fourth successive decline – which implies that economic activity shrank 18.7% YoY in 1QFY21. Industrial activities contracted sharply by a fifth (compared to 33% fall in May-20), while the services sector shrank only 3.6% YoY (supported by massive fiscal spending) in Jun’20. Farm activities grew 10.4% YoY – the highest pace in nine year
Overall, they suggest that real Indian GDP may have contracted 18-20% YoY in 1QFY21, in line with their estimate. An important point to ponder over now is whether economic activity will pick up from Aug-Sep-20 and continue to grow post the festive season. As the COVID-19 pandemic is still not contained in India and partial lockdowns have been re-introduced, continuation of stronger GDP growth is still not a given.
