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India’s Economy Contracts 7.3% In FY21, Worst In Over Four Decades

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India's Economy Contracts 7.3% In FY21, Worst In Over Four Decades

The fourth quarter numbers recorded a growth of 1.6 per cent.

The prevailing Coronavirus pandemic has affected India’s gross domestic product (GDP) numbers for January-March quarter and also for the financial year 2020-21, with the growth contracting by 7.3 per cent during FY21. The fourth quarter numbers recorded a growth of 1.6 per cent.

In 2019-20, the GDP had shown a poor growth of four per cent, an 11-year low, mainly due to contraction in secondary sectors like manufacturing and construction.

During the first quarter of 2020-21, India’s GDP had shrunk by 24.38 per cent, hit mainly by the Covid-19 pandemic.

The Central Statistics Office (CSO) released the GDP numbers for January-March quarter and financial year 2020-21 on Monday evening.

Hit by the pandemic and the nationwide lockdown imposed to curb the spread of infections last year, India’s economy had contracted during the first half of FY21, before returning to positive territory in October-December quarter with a growth of 0.4 per cent. In April-June, the economy had shrunk by 24.38 per cent, which improved to 7.5 per cent contraction in July-September.

The CSO had projected 8 per cent GDP contraction in FY21, implying a contraction of 1.1 per cent in March quarter. Meanwhile, the Reserve Bank of India had projected a 7.5 per cent contraction for FY21. However, most of the analysts had expected the economy to bounce back at a better-than-expected pace in March quarter, and predicted that the FY21 contraction would be less than CSO’s projection of 8 per cent.

According to a SBI research report, India’s GDP was likely to expand by 1.3 per cent in January-March quarter, thus leading to a less-than-expected 7.3 per cent contraction during FY21.

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