Will take months for Indian economy to register positive growth: P Chidambaram

It will take months for India's economy to register positive growth according to Congress leader P Chidambaram after government data revealed that the Indian economy had contracted by 23.9 percent in the April to June quarter (Q1 FY21).

The former finance minister, speaking through video conferencing at a press conference, said that the decline meant that "about one quarter of the gross domestic output as on June 30, 2019, has been wiped out in the last 12 months. Another way of looking at it is, since the end of 2019-20, the gross domestic output has fallen by about 20 per cent."

He pointed out that agriculture, forestry and fishing are the only sectors which have grown in the quarter while a "sharp decline" has been noticed in manufacturing, construction, trade, hotels, and transport among others.

"The estimates do not come as a surprise to us. They should be a matter of surprise to the government that was seeing 'green shoots' on several days during the first quarter. They should also be a matter of shame to the government that did nothing -- literally nothing -- to cushion the fall by taking suitable fiscal and welfare measures," he said and further added, "but we know that the Modi government has no shame and will not acknowledge its mistakes."

He also said that many close observers of the Indian economy, the latest of whom was the Reserve Bank of India (RBI) Annual Report had foretold this scenario, based on which the Congress had urged the government to take "preventive and pre-emptive" measures but "our pleas fell on deaf ears."

"It will take many months before the economy turns the corner and registers positive growth. The inaction and ineptitude of the government gives us no hope that we will see light at the end of the tunnel at any time soon," he further said.

The provisional estimates of GDP were released on Monday for the quarter April-June 2020. The contraction by 23.9 per cent of the Indian economy in the April to June quarter (Q1 FY21), marks the first contraction in more than 40 years as COVID-19 pandemic compressed consumer demand and private investments, government data showed.

The National Statistical Office (NSO) said gross value added (GVA) came in at minus 22.8 per cent.

The government and Reserve Bank of India have been prompt to take measures for mitigating the impact of pandemic on economy by rolling out stimulus packages, reforms and interest rate cuts.

However, the revival is expected to take time as there is still high uncertainty regarding COVID-19 cases across the country.