The economy expected to contract 7.7% in 2020-21 compared to 4.2% growth in 2019-20, reports news agency PTI quoting government data. This contraction comes mainly on account of the impact of the COVID-19 pandemic.
As per the first advanced estimates of the national income released by the National Statistical Office (NSO) on Thursday, there was a contraction in almost all sectors with the exception of agriculture.
“Real GDP or GDP at Constant Prices (2011-12) 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… The growth in real GDP during 2020-21 is estimated at -7.7% as compared to the growth rate of 4.2% in 2019-20,” the data said.
The 2020-21 contraction is in line with what the Reserve Bank of India (RBI) had projected in its December policy review.
In its December policy, the RBI had estimated that the economy will contract at a slower pace of 7.5%.
These numbers come ahead of the Union Budget for 2020-21 and are expected to chalk out government efforts to revive the dipping economy.
This is also the first official data from the government, estimating the economy’s damage brought about by the pandemic.
In the current fiscal, the manufacturing sector is likely to see a contraction 9.4% whereas growth was almost flat at 0.03% in the year-ago period.
The NSO estimates significant contraction in ‘mining and quarrying’, and ‘trade, hotels, transport, communication and services related to broadcasting’.
The Agriculture sector is estimated to see a growth of 3.4% in 2020-21. However, it will be lower than a 4% growth recorded in 2019-20.
The economy contracted 23.9% in the first quarter and 7.5% in the second quarter.
Earlier, India saw a technical recession in the second quarter of 2020-21 with two consecutive quarters of economic decline. After a 24% slump, the economy did better in the second quarter as the contraction slowed considerably to 7.5%.