India’s GDP contracts by 7.3 percent in fiscal year 2020-21 due to pandemic
New Delhi, May 31 (EFE).- India is set to register a 7.3 percent contraction in its GDP for the fiscal year 2020-2021, which ended in March, due to a sudden slump caused by the impact of the Covid pandemic and a strict lockdown during the first quarter (April-June 2020) that led to the economy plummeting by 24.4 percent.
According to provisional estimates released by the Central Statistics Office on Monday, the 7.3 percent contraction comes as a sharp contrast to the 4 percent growth registered in the financial year 2019-20, while the economy had grown at 6.1 percent during the year before.
“The measures taken by the Government to contain spread of the Covid-19 pandemic have had an impact on economic activities as well as on data collection mechanisms,” the CSO said..
The report said the sectors worst affected by the lockdown and other restrictions to contain the pandemic included those that required more person-to-person contact, although it stressed that their performance had improved during the subsequent quarters as the economy was gradually reopened.
The GDP registered a 1.6 percent growth during the last quarter – January-March 2021 – after a 0.5 percent growth in the previous one and a 7.4 percent contraction in the second quarter.
In February, the Reserve Bank of India – the country’s central bank – had predicted a 7.5 percent GDP contraction for the financial year 2020-2021, although forecasting a sharp 10.5 percent growth in the next cycle.
The forecast is along the same lines as the finance ministry’s annual economic survey – released in January – that predicted a V-shaped recovery, with the GDP expected to contract 7.7 percent in 2020-2021 and then jump 11 percent during the next financial year.
The International Monetary Fund has also backed this analysis, predicting the Indian economy to grow at 11.5 percent in 2021-22, above China’s 8.1 percent.
However, these predictions did not take into account the devastating second wave of the pandemic that hit India in April and May, leading to a collapse of the health system and a massive surge in deaths that saw crematoriums getting full, with authorities being forced to impose lockdowns in major cities such as New Delhi and Mumbai. EFE