The Ministry of Statistics and Programme Implementation (MOSPI) today said that India’s GDP may contract by 7.7 per cent in the current fiscal year 2020-21. Real GDP at constant prices 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, it added. The government’s first advance estimates are in line with the estimates of the Reserve Bank of India and various rating agencies. RBI has predicted India’s economy to shrink by 7.5 per cent in FY21 while rating agencies ICRA and Crisil have predicted it to contract by 7.8 per cent and 7.7 per cent respectively. Are Ratings has estimated the GDP to fall in the range of 7-7.9 per cent this year.
After the coronavirus pandemic hit the Indian shores, the government had imposed a strict nationwide lockdown to arrest the spread of the virus. However, it brought the wheel of the economy to a standstill and consequently, India recorded a record contraction in the country’s GDP in the fiscal first quarter, which was 23.9 per cent. However, as the unlock phase began in June, the GDP revived sharply to a contraction of only 7.5 per cent in the second quarter.
Though a significant amount of recovery was seen during the festive season after Q2, it is unlikely to have been reflected in the first advance estimates as it is based on projections from a seven month period (April–October), using a mix of the corporate results, agriculture production data, transport and freight estimates, the index of industrial production, bank credit and deposits, and various other indicators. Nevertheless, the second advance estimates will be released by the end of February and will be based on a more comprehensive set of data.
Meanwhile, from GST collections to passenger vehicle dispatches to dealers, and from the Manufacturing Purchasing Managers Index (PMI) to other macro indicators, the wheels of the economy appeared to be recovering in December. However, the recovery in the economic figures has not helped the employment conditionimprove. The unemployment rate shot up to 9.1 per cent in the last month, according to the Centre for Monitoring Indian Economy (CMIE).