Economy Contracts By Record 7.3% In 2020-21

Recording its worst ever performance in over four decades, India clocked a negative growth of 7.3 per cent for 2020-21 while the fourth quarter of the fiscal showed a meagre rise of 1.6 per cent. The GDP numbers released by the National Statistical Office (NSO) on Monday, reflect the delicate state of the nation's economy and is all the more glaring since the Centre had begun the 'Unlock' process from July 2020 onwards after imposing a nation-wide lockdown in March 2020, which had lasted till June 2020.

The fourth quarter numbers are all the more poor as during the January-March period, all sectors had been completely opened and the situation was near normal, yet a 1.6 per cent growth during the fourth quarter of FY21 shows all is not well with the fiscal health of the nation.

"Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in the year 2020-21 is now estimated to attain a level of Rs 135.13 lakh crore, as against the First Revised Estimate of GDP for the year 2019-20 of Rs 145.69 lakh crore, released on 29th January 2021. The growth in GDP during 2020-21 is estimated at -7.3 percent as compared to 4.0 percent in 2019-20," Ministry of Statistics & Programme Implementation said in a press release.

In 2019-20, the GDP had shown a poor growth of four per cent, an 11-year low, mainly due to contraction in secondary sectors like manufacturing and construction.

During the first quarter of 2020-21, India's GDP had shrunk by 24.38 per cent, hit mainly by the Covid-19 pandemic.

The Central Statistics Office (CSO) released the GDP numbers for January-March quarter and financial year 2020-21 on Monday evening.

Hit by the pandemic and the nationwide lockdown imposed to curb the spread of infections last year, India's economy had contracted during the first half of FY21, before returning to positive territory in October-December quarter with a growth of 0.4 per cent. In April-June, the economy had shrunk by 24.38 per cent, which improved to 7.5 per cent contraction in July-September.

The CSO had projected 8 per cent GDP contraction in FY21, implying a contraction of 1.1 per cent in March quarter. Meanwhile, the Reserve Bank of India had projected a 7.5 per cent contraction for FY21. However, most of the analysts had expected the economy to bounce back at a better-than-expected pace in March quarter, and predicted that the FY21 contraction would be less than CSO's projection of 8 per cent.

According to a SBI research report, India's GDP was likely to expand by 1.3 per cent in January-March quarter, thus leading to a less-than-expected 7.3 per cent contraction during FY21.