Indian Economy Contracted By -7.3 % In FY 2020-21; Q4 GDP Growth At 1.6 %: Govt

The fiscal deficit has been projected at 9.3% of GDP in 2020-21, down from the revised estimate of 9.5%

Official data by the government released on Monday said that the Indian economy grew by 1.6 percent in the January-March quarter but witnessed a contraction of -7.3 percent for the entire fiscal year. Data also showed the fiscal deficit at 9.3% of GDP in 2020-21, down from the revised estimate of 9.5%

This is the second quarter that the economy has shown a positive figure of growth after it slipped into recession thanks to the coronavirus-induced lockdown and restrictions in March 2020.

#GDP pic.twitter.com/NHzCW8xKfi

— NDTV (@ndtv) May 31, 2021

The NSO has also stated that the pandemic has disrupted their regular flow of data, which has had a bearing on quarterly estimates; a shortcoming overcome by the NSO by relying on alternative data sources, indicators, and methodologies. “Estimates are, therefore, likely to undergo sharp revisions in due course, as per the release calendar”, states the NSO, asking users to take them into account while interpreting them.

Fiscal Deficit Data | April #FiscalDeficit at Rs 78,700 cr Vs Rs 2.79 lk cr (YoY) pic.twitter.com/H2Wy6pVO51

— CNBC-TV18 (@CNBCTV18Live) May 31, 2021

Chief Economic Adviser Krishnamurthy Subramanian said that there has been a marginal improvement in the FY21 GDP, quoted CNBC-TV18. He added that GDP numbers signify a revival of demand in the second half of the year and that agriculture is the silver lining for FY21 GDP. However, he pointed out that there has been some impact of the second COVID wave.

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Among sectors, the agriculture growth for FY21 has been estimated at 3.6 percent, while mining contracted by 8.5 percent. The manufacturing shrunk by 7.2 percent, while electricity growth came in at 1.9 percent. The growth in construction contracted by 8.6 percent, while trade, hotels grew at a negative rate of 18.2 percent. The financial and real estate sector shrunk by 1.5 percent, while public administration growth too was negative at 4.6 percent.

“As expected, the low base of the nationwide lockdown pushed up the core sector expansion to 56% in April 2021, a shade lower than our forecast of around 60%. The improvement was fairly broad-based, with an expected spike in the growth of cement and steel, although both lagged our projections suggesting some impact of the regional lockdowns on activity. The range of outcomes in April 2021 was huge, with a continued contraction in crude oil reflecting an insulated mining sector during the lockdown, and a massive 549% YoY expansion in cement.” said Aditi Nayar, Chief Economist at ICRA, according to Moneycontrol

Finance Minister Nirmala Sitharaman, said on Friday that no decision has been taken for another stimulus package, has limited space due to a fall in tax collections and rising public debt.