India’s economy shrank nearly 24 pct last quarter

NEW DELHI — The Indian economy contracted by 23.9 percent in the second quarter, the most drastic fall in decades, as lockdown restrictions meant to contain the spread of the coronavirus wiped out jobs and businesses.

India’s picture is further complicated by the fact that so many people here are “informally” employed, working in jobs that are not covered by contracts and often fall beyond government reach, such as rickshaw driver, tailor, day laborer and farmhand. Economists say that official numbers are bound to underestimate that part of the economy and that the full damage could be even greater.

Millions of workers who over the years had been drawn to the urban centers for jobs started returning home to rural areas. But as the ailing economy contracted even more, officials desperate to stimulate business lifted some of the lockdown restrictions, allowing more movement, which led the virus to spread wide and far. The country is now recording the world’s highest number of daily new infections.

The data released Monday showed that consumer spending, private investment and exports had all suffered tremendously. The sector including trade, hotel and transport dipped 47 percent. India’s once mighty manufacturing industry shrank 39 percent. Nayar, the economist, said that while some parts of India’s economy had started to recover, the rising number of infections and the steps taken to contain them suggested an uneven recovery. India has had 3.6 million infections and around 80,000 new cases reported each day, which are far more than anywhere else. Its death rate, though, remains substantially lower, which epidemiologists say is a result of a younger population than that of many countries.

Arun Kumar, a professor at New Delhi’s Institute of Social Sciences, said the informal part of India’s economy, which includes the millions of migrant workers who have lost their jobs, had suffered an even bigger blow than most people realized.

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