Following the Covid breakout and lockdown last year, the GDP had contracted by a record 23.9 per cent in the April-June quarter and further by 7.5 per cent in the second quarter. However, a V-shaped recovery is expected in the next fiscal year, according to the Economic Survey 2020-21.
The government has projected contraction in India’s gross domestic product (GDP) by 7.7 per cent in the current financial year even as it is seen expanding by 11 per cent in 2021-22 with a V-shaped recovery on the back of the Covid vaccination drive, according to the Economic Survey 2020-2021 tabled by Finance Minister Nirmala Sitharaman in Lok Sabha on Friday. Following the Covid breakout and lockdown last year, the GDP had contracted by a record 23.9 per cent in the April-June quarter and further by 7.5 per cent in the second quarter. The survey, which has come days ahead of the Union Budget for the new financial year, was authored by a team led by Chief Economic Adviser Krishnamurthy Venkata Subramanian.
The Economic Survey projections on the GDP contraction mirror the forecast of the Reserve Bank of India that had predicted 7.5 per cent shrink in the GDP in its revised estimate from 9.5 per cent in October 2020. Rating agencies including ICRA and Crisil too had expected 7.8 per cent and 7.7 per cent contraction respectively while CARE Ratings had estimated the fall of 7-7.9 per cent against its previous projection of 8.2 per cent.
“Despite the hardhitting economic shock created by the global pandemic, India is witnessing a V-shaped recovery with a stable macroeconomic situation aided by a stable currency, comfortable current account, burgeoning forex reserves, and encouraging signs in the manufacturing sector output,” the survey said.
The International Monetary Fund had also recently projected a strong rebound for India’s economy with 11.5 per cent on year growth in FY22 from its earlier projection of 8.8 per cent expansion. This would make India the only key nation to see double-digit growth and reclaim the status of the world’s fastest-growing major economy, it said. The RBI in its 67th round of the Survey of Professional Forecasters on Macroeconomic Indicators had expected a 9.5 per cent real GDP growth rate even as agriculture, industry, and services verticals are likely to see a 3.2 per cent, 11.2 per cent, and 9.5 per cent growth in FY22.