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Govt expects GDP to contract 7.7% in FY21

All sectors, barring agriculture and electricity, are likely to see contraction in FY21, with 'trade, hotels, transport, communication and services related to broadcasting' expecting to see massive contraction of 21.4 per cent

Chitranjan Kumar | January 8, 2021 | Updated 17:02 IST
Govt expects GDP to contract 7.7% in FY21
Govt pegs FY21 GDP growth at -7.7%

The Indian economy is expected to contract by 7.7 per cent in the current financial year, as compared to the growth rate of 4.2 per cent in 2019-20, as per the first advanced estimates of the national income released on Thursday, January. National Statistical Office (NSO) data showed that almost all sectors, barring agriculture, to see (To see or likely to see?) contraction in FY21.

This is in line with the Reserve Bank of India (RBI) estimate, which has revised its growth projection for the country's real gross domestic product (GDP) for 2020-21 to -7.5 per cent, from its earlier forecast of -9.5 per cent. The upward revision was done in the wake of improvement in economic activity in the second half of the current fiscal year.

"Real GDP or GDP at Constant Prices (2011-12) in the year 2020-21 is likely to attain a level of Rs 134.40 lakh crore, as against the Provisional Estimate of GDP for the year 2019-20 of Rs 145.66 lakh crore, released on May 31, 2020. The growth in real GDP during 2020-21 is estimated at -7.7 per cent as compared to the growth rate of 4.2 per cent in 2019-20," as per the data released by the Ministry of Statistics and Programme Implementation (MOSPI).

Real GVA at Basic Prices has been pegged at Rs 123.39 lakh crore in 2020-21, as against Rs 133.01 lakh crore in 2019-20, showing a contraction of 7.2 per cent.

Nominal GDP or GDP at current prices is seen attaining (or will likely attain?)a level of Rs 194.82 lakh crore in FY21, as against the Provisional Estimate of GDP for the year 2019-20 of Rs 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 Rs 175.77 lakh crore in 2020-21, as against Rs 183.43 lakh crore in 2019-20, showing a contraction of 4.2 per cent.

Looking at sector wise contraction, manufacturing sector to see (same problem as above, is it likely to see?) a contraction 9.4 per cent against growth of 0.03 per cent in the year-ago period, while agriculture sector is estimated to grow at 3.4 per cent in FY21 versus 4 per cent in FY20.

'Mining and quarrying' and 'trade, hotels, transport, communication (or communications?) and services related to broadcasting' sectors are expected to see a massive contraction of 12.4 per cent and 21.4 per cent, respectively, versus a growth of 3.1 per cent and 3.6 per cent in the year-ago period.

Among others, electricity is likely to grow by 2.7 per cent versus 4.1 per cent in last fiscal, while financial services and public services are estimated to contract 0.8 per cent and 3.7 per cent, 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," the ministry said.

"Estimates are therefore likely to undergo sharp revisions for the aforesaid causes in due course, as per the release calendar," it added.

The government will release 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) on February 26, 2021.

India's GDP fell by 7.5 per cent during July-September quarter of the current fiscal, against the massive contraction of 23.9 per cent in the first quarter.

Also Read: Budget 2021: PM Narendra Modi to interact with economists on Friday

Also Read: Rebooting Economy 56: Why India should follow agricultural development-led industrialisation growth model

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