India's 2020-21 GDP to shrink 7.7%, biggest contraction since 1952
India's economy is estimated to contract 7.7% in the fiscal year 2020-21, according to the first advance estimates released by the National Statistical Office (NSO), the Ministry of Statistics & Programme Implementation (MoSPI). The contraction in India's Gross Domestic Product (GDP) has mainly been attributed to the coronavirus pandemic which has kept the government from fully reopening the economy. Here are more details.
GDP will shrink 7.7% compared to 4.2% growth last fiscal
India's GDP will shrink 7.7% compared to 4.2% growth in the previous fiscal. "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 31st May 2020," the MoSPI release said.
First time since 1980 that GDP has contracted
The GDP estimates mark the biggest annual contraction since 1952, Bloomberg reported. It will also be the first time that India's GDP has contracted since 1980 when the economy had shrunk by 5.2%. It is set to be the worst economic slump in Asia after the Philippines' estimated 8.5%-9.5% drop. The estimates may be revised as the pandemic had disrupted the data collection process.
Significant contraction estimated in 'mining and quarrying'
According to the release, the Real GVA (Gross Value Added) is estimated at Rs. 123.39 lakh crore in 2020-21 against Rs. 133.01 lakh crore in 2019-20 (a contraction of 7.2%). Agriculture sector growth is estimated at 3.4% against 4% the previous fiscal. The NSO estimated significant contractions in 'mining and quarrying' (-12.6%), and 'trade, hotels, transport, communication, and services related to broadcasting' (-21.4%).
First advance estimates released before Union Budget
The first advance estimates of GDP are released ahead of the release of the Union Budget for the next fiscal. The Budget session of the Parliament will reportedly start from January 29 and the Budget for FY2021-22 will be presented on February 1.
