India imposed a strict lock-down from 25th March, 2020. April, 2020 was the month of economic tandstill with restrictions on various activities eased in May, 2020.
As restrictions were further eased, the country entered the unlock phase in June, 2020.
The Supply & Demand side shock
The loss of economic output from more than two months of lock-down was first triggered from the supply side as labour stayed away from work.
The demand side caused further loss of output as consumption of goods and services dependent on customer mobility fell.
This twin supply-demand shock on output subsequently led to loss of income, which caused further decline in consumption resulting in further loss of output.
Owing to these unprecedented COVID-19 induced supply-demand shocks, IMF’s June, 2020 WEO update projects growth of India’s output at (-)4.5% in 2020-21 and that of world’s at (-)4.9%.
While the biggest reason for the unprecedented contraction is the lockdown forced by the pandemic,
The economic growth had been slowing down even before that.
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