Pulled down by a sharp contraction in the services, manufacturing and mining sectors, India’s gross domestic product (GDP) will contract 7.7 per cent in the current financial year as against a growth of 4.2 per cent in the previous fiscal, the first advance estimates released by the National Statistical Office (NSO) show.
“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, released on May 31, 2020,” the First Advance Estimates of National Income for financial year 2020-21 said.
“The growth in real GDP during 2020-21 is estimated at -7.7 per cent as compared to the growth rate of 4.2 per cent in 2019-20,” it added.
As per the estimate, real gross value added (GVA) at basic prices is estimated at Rs 123.39 lakh crore in 2020-21, as against Rs 133.01 lakh crore in 2019-20, showing a contraction of 7.2 per cent.
“With a view to contain the spread of the Covid-19 pandemic, certain restrictions were imposed from March 25, 2020. Though the restrictions have been gradually lifted, there has been an impact on the economic activities as well as on the data collection mechanisms,” the National Statistical Office (NSO) said.
In terms of sectors, the estimates showed that GVA at basic prices by economic activity at 2011-12 prices showed a contraction in trade, hotels, transport, communication and services related to broadcasting; financial, real estate and professional services; and public administration, defence and other services at (-)21.4 per cent, (-)0.8 per cent and (-)3.7 per cent, respectively.
The growth in the agriculture, forestry and fishing; mining and quarrying; manufacturing and construction is estimated to be 3.4 per cent, (-)12.4 per cent, (-)9.4 per cent and (-)12.6 percent, respectively.
The GVA at basic prices for 2019-20 from electricity, gas, water supply and other utility services sector is expected to grow by 2.7 per cent.
Reacting to the estimates, Sunil Kumar Sinha, principal economist, India Ratings & Research said, “A 3.7% contraction in GVA of public administration and mere 5.8% growth in GFCE (lowest in last seven years) at a time when the economy is facing its worst is a bit intriguing. Imputed GVA growth of public administration (3.3%) and GFCE growth (17.0%) in 2HFY21 suggests that these estimates are contingent on government (both central and states) spending.”
Dharmakirti Joshi, chief economist at CRISIL Research, said, “Excluding agriculture and public administration, GVA growth stands at (-)10%. On the expenditure side, excluding government consumption, GDP growth stands at (-)9.5%.”
The Finance Ministry in its statement said the movement of various high frequency indicators in recent months points to the “broad based nature of resurgence of economic activity”.
“The relatively more manageable pandemic situation in the country as compared to advanced nations has further added momentum to the economic recovery,” it said.
The RBI in its monetary policy statement on December 4 had said that private investment is still slack and capacity utilisation has not fully recovered.