India’s GDP growth dips to -7.3 per cent in FY 2020-21: Centre

India’s GDP growth dips to -7.3 per cent in FY 2020-21: Centre New Delhi: A worker busy at a factory in the Wazirpur Industrial area as the unlocking process of COVID-19 lockdown begins, in New Delhi, Monday, May 31, 2021. (PTI Photo/Shahbaz Khan)

New Delhi: Indian economic growth contracted to (-) 7.3 percent in the financial year 2020-21, down from 4.0 per cent in 2019-20, the data released by the Government of India showed on Monday.

The Government data released shows the impact on the economic growth of India, as compared to previous financial years, before lockdowns and other restrictions were imposed after the second wave of COVID-19. In February, the Centre pegged the GDP contraction at 8 per cent for the FY 2020-21.

A continuing fall in domestic consumption due to Covid-19 pandemic is attributed to the sluggish economic pace.

Real GDP or gross domestic product (GDP) at constant (2011-12) prices in 2020-21 is estimated to attain a level of Rs 135.13 lakh crore as against the first revised estimate of GDP for 2019-20 of Rs 145.69 lakh crore.

“The growth in GDP during 2020-21 is estimated at minus 7.3 per cent as compared to 4 per cent in 2019-20,” said the National Statistical Office (NSO).

“GDP at constant (2011-12) prices in Q4 of 2020-21 is estimated at Rs 38.96 lakh crore as against Rs 38.33 lakh crore in Q4 of 2019-20, showing a growth of 1.6 per cent.” GDP is derived as the sum of the gross value added (GVA) at basic prices plus all taxes on products less all subsidies on products. The total tax revenue used for GDP compilation includes non-GST revenue and GST revenue.

Fiscal Deficit

Fiscal deficit for 2020-21 was at 9.3 per cent of the gross domestic product (GDP), lower than 9.5 per cent estimated by the Finance Ministry in the revised Budget estimates, according to the CGA data.

Unveiling the revenue-expenditure data of the Union government for 2020-21, the Controller General of Accounts (CGA) on Monday said that the revenue deficit at the end of the fiscal was 7.42 per cent.

In absolute terms, the fiscal deficit works out to be Rs 18,21,461 crore. For this financial year, the government had initially pegged the fiscal deficit at Rs 7.96 lakh crore or 3.5 per cent of the GDP in the budget presented in February 2020.

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The government in the revised estimates in the Budget for 2021-22 forecast a higher fiscal deficit of 9.5 per cent of the GDP or Rs 18,48,655 crore for the fiscal ended in March due to a rise in expenditure on account of the outbreak of COVID-19 and moderation in revenue during this fiscal year.

Fiscal deficit had soared to a high of 4.6 per cent of the Gross Domestic Product (GDP) in 2019-20, mainly due to poor revenue realisation.

In April, the RBI had projected the GDP growth at 10.5 per cent in financial year 2021-22, meanwhile inflation is projected to reach 5 per cent in fourth quarter of FY 2021, inflation in the first half of FY 2022 is projected at 5.2 per cent which will go down to 4.4 per cent in the thirds quarter and rise to 5.1 per cent in the last quarter (Q4) of FY 2022.

The central bank had warned that recent surge in COVID cases can dampen the gains earned by the economy so far, therefore a close look at change in demand conditions in the economy will be needed.

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