NEW DELHI: India’s pandemic-battered economy will shrink only 7.7% in the ongoing financial year (FY21) and not the near 10% decline projected by international agencies like the IMF and World Bank, according to the government’s advance GDP estimate released on Thursday.
According to the finance ministry, the GDP estimates reflect resurgence in economic activities in the third and fourth quarters. “The continuous quarter-on-quarter growth endorses the strength of economic fundamentals of the country to sustain a post-lockdown V-shaped recovery,” a ministry statement read.
However, the government’s projections would still make FY21 the worst year for Indian economy since independence.
In FY20, GDP had grown 4.2% — the slowest in 11 years. Real GDP at constant prices in FY21 is likely to attain a level of Rs 134.40 lakh crore as against the provisional estimate of Rs 145.66 lakh crore in FY20. Nominal GDP, which includes the price increases along with real output growth, is projected to contract 4.2% to Rs 194.82 lakh crore.
The first advanced GDP estimate is based on data of a seven-month period (April–October) — using a mix of data such as corporate results, agriculture production, transport and freight estimates, IIP, and bank deposits. The projection may be revised when better data is available. The second advance estimate is due to be released on February 26.
Agri is only bright spot
Contraction is forecast in almost all sectors except agriculture, which is projected to grow at 3.4%, while manufacturing could contract 9.4%. The job-intensive construction sector to fall 12.6%