India’s GDP may contract by 7.7% in FY21, says govt in first advance estimates

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The growth in India’s real GDP during 2020-21 is estimated at -7.7% as compared to the growth rate of 4.2% in 2019-20, said government on Thursday as part of its first advance estimates of the economic growth.

Real GDP or GDP at Constant Prices (2011-12) in the year 2020-21 is likely to attain a level of 134.40 lakh crore, as against the Provisional Estimate of GDP for the year 2019-20 of 145.66 lakh crore, released on 31 May, 2020.

Real GVA at basic prices is estimated at 123.39 lakh crore in 2020-21, as against 133.01 lakh crore in 2019-20, showing a contraction of 7.2 percent.

Nominal GDP or GDP at Current Prices in the year 2020-21 is likely to attain a level of 194.82 lakh crore, as against the Provisional Estimate of GDP for the year 2019-20 of 203.40 lakh crore, released on 31 May 2020. The growth in nominal GDP during 2020-21 is estimated at -4.2 per cent. Nominal GVA at Basic Prices is estimated at 175.77 lakh crore in 2020-21, as against 183.43 lakh crore in 2019-20, showing a contraction of 4.2 percent.

As per the first advanced estimates of the national income released by the National Statistical Office (NSO) on Thursday, there was contraction in almost all sectors with the exception of agriculture.

In the current fiscal, manufacturing sector is likely to see a contraction 9.4 per cent whereas growth was almost flat at 0.03 per cent in the year-ago period.

The NSO estimates significant contraction in ‘mining and quarrying’, and ‘trade, hotels, transport, communication and services related to broadcasting’.

Agriculture sector is estimated to see a growth of 3.4 per cent in 2020-21. However, it will be lower than 4 per cent growth recorded in 2019-20.

While agriculture sector is projected to grow at 3.4% in FY21, manufacturing sector is estimated to contract 9.4% while electricity is likely to grow at 2.7%. Among services sectors, trade, hotel, transport are projected to contract 21.4% (as compared to growth of 3.6% a year ago) while financial services and public services are estimated to contract 0.8% and 3.7% respectively.

“With a view to contain spread of the Covid-19 pandemic, certain restrictions were imposed from 25 March, 2020. Though the restrictions have been gradually lifted, there has been an impact on the economic activities as well as on the data collection mechanisms. Estimates are therefore likely to undergo sharp revisions for the aforesaid causes in due course, as per the release calendar. Users should take this into consideration when interpreting the figures. The release of Second Advance Estimates of National Income for the year 2020-21 and quarterly GDP estimate for the quarter October-December, 2020 (Q3 of 2020-21) will be on 26.02.2021,” said Ministry of Statistics & Programme Implementation in an official release.

The pandemic and stringent lockdown measures imposed by India in the early stages hit India hard. Asia’s third largest economy recorded its first-ever recession with a contraction of 23.9% in the April-June quarter and a 7.5% fall in the September quarter.

The Reserve Bank of India (RBI) last month projected the Indian economy to contract 7.5% in FY21, thus revising the 9.5% contraction it projected just two months ago, on the back of a host of lead indicators, suggesting sustained economic recovery. It expects the economy to post 0.1% growth in December quarter and 0.7% in March quarter to end FY21 with 7.5% contraction

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