The National Statistical Organisation (NSO) has predicted that in the current financial year, the Indian economy will contract 7.7 per cent which happens to be the worst in the last four decades. However, it is expected to rebound with an 8.9 per cent growth in the upcoming fiscal year as the economy has witnessed significant improvement in the last quarter.
The IHS Markit stated that Indian economy saw a big recession in 2020 and the worst contraction happened from the period of March till August, however, there was a strong rebound in economic activity since September.
Due to the nationwide lockdown imposed, for April-June quarter, the was GDP was contracted by a record rate of 23.9 per cent. Whereas, the 2020’s fourth quarter industrial production and consumption expenditure witnessed a great rebound and the contraction came down to 7.5 per cent.
IHS said, “Statistics for the month of October highlighted that industrial production increased by 3.6 per cent year-on-year compared with a steep contraction of -55.5 per cent in April 2020. As Indian economy is showcasing positive signs in domestic economic activity in the fourth quarter of 2020, the outlook is for Indian GDP growth to rebound by 8.9 per cent year-on-year in the 2021-22 fiscal year”.
According to Arun Singh, Global Chief Economist, Dun & Bradstreet, “While the investment and consumption demand data were expected to register a strong decline, the 5.8 per cent growth in government final consumption expenditure, the lowest since FY15, was not quite anticipated.”
As per NSO projections, the GDP growth highlights that the Indian economy might shrink to Rs 134.40 lakh crore for the financial Year 21 as against Rs 145.66 lakh crore in FY20.
Industries are seeking some recovery in the second half and hoping that the upcoming Budget will extend support to uplift the services sector, which is continuously lagging.