GDP Contraction in 1QFY21 Expected At 18 To 20 Per Cent

Broking firm, Motilal Oswal expects GDP to contract 18 to 20 per cent in the first quarter of 2020-21.

The brokerage firm believes that the decline in the IIP, which was released on Tuesday, was much lower than expected.

"While decline in Jun'20 IIP was slower vis-a-vis the previous three months, our monthly EAI-GDP/ GVA suggests overall economic activity still saw massive decline. This was largely attributable to the partial lockdowns imposed by certain states in the wake of rising COVID-19 cases. Consequently, we expect real GDP to have declined 18-20% in 1QFY21.

Moreover, as these lockdowns continued in many parts of India even in Jul'20 and the first few days of Aug'20, we believe industrial production and real GDP are not out of the woods yet," the broking firm has stated.