India's gross domestic product (GDP) is expected to contract 4.5 per cent in fiscal 2020-21 in line with the global growth slowdown due to coronavirus lockdown. The projection was 6.4 percentage points lower than what the government had estimated in April this year, the Ministry of Finance said.
On coronavirus, the Department of Economic Affairs (DEA) said in its macroeconomic report that uncertainty around COVID-19 in absence of a vaccine poses a serious challenge. However, the government's structural reforms and social welfare measures would help build greenshoots, it added.
Adding, it said that exports have increased amid pandemic and the lockdown due to a sharp decline in imports and low crude oil prices in the global markets. DEA also said that revenue receipts so far in the ongoing fiscal have fallen 68.9 per cent on a year-on-year basis. The inflation outlook continues to remain weak. The trajectory of inflation will continue to depend on the recovery rate from the coronavirus.
Meanwhile, according to the June forecast of the International Monetary Fund (IMF), the Indian economy is set to contract by 4.5 per cent in 2020 following a longer period of lockdown and slower recovery. The IMF's latest forecast for India is in line with other forecasts that project Asia's third-largest economy to contract between 4 per cent and 5 per cent in 2020.
"First-quarter GDP was generally worse than expected (the few exceptions include, for example, Chile, China, India, Malaysia, and Thailand, among emerging markets, and Australia, Germany, and Japan, among advanced economies). High-frequency indicators point to a more severe contraction in the second quarter, except in China, where most of the country had reopened by early April." the June World Economic Outlook report said.Also read: India-China issue: Chinese Army moves back over 1 km from Galwan valley
Also read: Sovereign Gold Bond scheme opens for subscription: Five things to know before you invest
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today