He said indicators like rail freight traffic and electricity consumption are pointing to a recovery in economic activity.
“Given the intensity of the lockdown…higher intensity, this (growth number) is actually along expected lines. What is important is that India is experiencing a V-shaped recovery after the unlock has been announced,” he told PTI.
Citing some examples, he said railway freight traffic, which is often a good indicator of economic activity, has reached 95 per cent of the level seen in July last year and was 6 per cent higher in the first 26 days of August, compared to the same time last year.
Power consumption is just 1.9 per cent lower than last year, he said.
“E-way bills capture interstate trade, which do get affected by by local lockdowns and yet the e-way bills are at 99.8 per cent in August so far,” he said.
Talking about the eight core infrastructure sectors, he said core sector output declined by 38 per cent in April, but since then the rate of contraction has come down to 22 per cent in May, 13 per cent in June and 9.6 per cent in July.
“Overall, there is clearly a V-shaped recovery. One noteworthy point is that agriculture sector is the one sector that has grown at 3.4 per cent despite the lockdown that was in Q1…(this) is reflective of the several reform measures that the government has announced, like the APMC reforms and Essential Commodities Act etc,” he said.
This is also reflected in rural inflation now being higher than urban inflation, he added.
Hit by the COVID-19 crisis, India’s GDP shrank by the steepest ever 23.9 per cent in April-June, as against a growth of 5.2 per cent in the same quarter of the last fiscal, as per data released by the National Statistical Office (NSO).
“This decline is expected given the lockdown globally that happened and India is definitely experiencing a V-shaped recovery. So, we should expect better performance in the subsequent quarters,” Subramanian emphasised.
Comparing the contraction with the UK economy, the CEA said India’s lockdown was more intense than that in the UK, which witnessed 22 per cent decline in the April-June quarter.
Quoting the World Economic Outlook by the International Monetary Fund, he said it has highlighted that GDP per capita would decrease the highest since 1870.
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This is once in one-and-a-half century event, which is what India is going through as well, he said.
As per the NSO data, the construction sector GVA contracted by a whopping 50.3 per cent from 5.2 per cent expansion earlier. Mining sector output declined at 23.3 per cent, as against a growth of 4.7 per cent a year ago.
Electricity, gas, water supply and other utility services segment too shrank by 7 per cent in the first quarter of 2020-21, against 8.8 per cent growth a year ago.
Similarly, trade, hotel, transport, communication and services related to broadcasting declined 47 per cent in the first quarter from 3.5 per cent growth earlier.