India economy
The pandemic and lockdown has tripped up India's economy into a deep contraction. Image Credit: Agency

Mumbai: India's economy contracted by the most on record last quarter as the world's biggest lockdown to stem the pandemic brought key industries to a halt and rendered millions of people jobless.

Gross domestic product shrank 23.9 per cent in the three months to June from a year earlier, the Statistics Ministry said in a report. That's the sharpest decline since the nation started publishing quarterly figures in 1996, and was worse than any of the main Asian economies tracked by Bloomberg. The median estimate in a survey of economists was for an 18 per cent contraction.

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Financial services - the biggest component of India's dominant services sector - shrank 5.3 per cent from a year ago. Data also showed:

Extending into full-year

Once the world's fastest-growing major economy, India is now on track for its first full-year contraction in more than four decades. While there are early signs that activity began picking up this quarter as lockdown restrictions were eased, the recovery is uncertain as India is quickly becoming the global epicenter for virus infections.

A mix of monetary and fiscal measures so far to prop up the economy won't prevent it from sliding into recession. The government has provided only limited fiscal support given constraints on revenue growth, while the central bank has cut interest rates by 115 basis points so far this year, boosted liquidity and transferred billions of rupees in dividends to the state.