Amid COVID-19 outbreak, India's GDP contracts 7.3% in FY2020-21
As the second wave of COVID-19 has disrupted regular life, India's Gross Domestic Product (GDP) contracted 7.3% in the financial year 2020-21, data shared by the government showed on Monday. In the fourth January-March quarter, when infections had declined, a growth of 1.6% was recorded. In comparison, the GDP growth rate had stood at an 11-year low of 4.2% in FY 2019-20.
Data revealed by the Central Statistics Office (CSO) on Monday evening showed that India's GDP contracted 7.3% in the last fiscal. Notably, in the first April-June quarter, at the height of the lockdown, India's GDP had shrunk by 24.38%. India's GDP growth rate had only turned positive by the third quarter of FY2020-21 when it stood at 0.4% and exited recession.
The economic slowdown has been attributed to COVID-19 and the lockdown imposed to limit its spread, which also limited economic activities. India's COVID-19 outbreak had notably peaked in September, which was followed by a decline in infections. Currently, the country is battling a second wave.
The CSO had previously projected a GDP contraction of 8% in FY2020-21, indicating a contraction of 1.1% in the fourth quarter. Meanwhile, the Reserve Bank of India (RBI) had projected a 7.5% contraction. However, several experts had projected that the economic recovery would be stronger than expected. A recent Reuters poll of economists had suggested that India's economy accelerated in the January-March quarter.
According to data shared by the Controller General of Accounts (CGA) on Monday, India's fiscal deficit for FY2020-21 stood at 9.3%. In absolute terms, it stood at Rs. 18,21,461 crore. The figure was lower than the 9.5% previously projected by the Union Finance Ministry in the revised Budget estimates. The revenue deficit at the end of the fiscal was 7.42%, the CGA data showed.