With the year-long COVID-19 pandemic hitting the Indian economy the hardest, the Ministry of Statistics & Programme Implementation, on Thursday, estimated that India's GDP will be -7.7% for FY 20-21 - lowest till date. In comparison, India's overall FY 19-20 GDP stood at 4.2% - an 11-year low. As per the National Council for Applied Economic Research (NCAER), India is set to see a marginally positive 0.1% growth in the third quarter.
Real GDP is expected to contract by 7.7% in 2020-21 as compared to 4.2% growth in 2019-20: Ministry of Statistics & Programme Implementation pic.twitter.com/qRsF26pm1O— ANI (@ANI) January 7, 2021
NCAER adjusted its forecast as per the ongoing fiscal to -7.3% compared to -12.6% in September to account for the sharp moderation in contraction in the second quarter at -7.5%, as per reports. Indicators across industry and services like the goods and services tax (GST) collections, GST e-way bills, Index of Industrial Production and Purchasing Managers’ Index have moderated the pace of recovery after the September-October uptick, said Bornali Bhandari, in its mid-year review of the economy. Fitch Ratings, on the other hand, has raised India's GDP forecast to -9.4 per cent in the current fiscal year to March 2021 from a previously projected contraction of 10.5 per cent.
Marking its worst contraction in history, India's GDP growth for the first quarter of FY 21 stood at -23.9% as per data released by the National Statistical Office (NSO) on August 31. This contraction came after the overall FY 19-20 GDP growth stood at 4.2%, hitting an 11-year low. As per market reports, core sectors' growth stood at: Industries at -381%, Services at -20.6%, Manufacturing at -39.3 %, Trade, Hotels at -47%. Agriculture has been the only sector to see growth clocking a 3.4% increase, due to rural sector remaining mostly free from lockdown. At this point, CRISIL had predicted that India's fourth recession since independence, the first since liberalisation and perhaps the worst to date, is here.
Subsequently, in the second quarter of FY 21, India's GDP contracted at -7.5% - plunging the nation into recession with two successive quarters of contraction. In this quarter, sectors such as agriculture, forestry and fishing (3.4%), manufacturing (0.6%) and electricity, gas, water supply and other utility services (4.4%) have recorded a positive GDP growth. The pace of contraction was slower than estimates, claimed analysts. The faster rate of economic recovery showed the 'revival of both consumption and investment', stated the Ministry of Finance.