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GDP grows 1.6% in Q4, but contracts 7.3% in FY21
India’s gross domestic product (GDP) increased by 1.6% in the January-March quarter of fiscal year 2020-21, but contracted by 7.3% for the entire fiscal year, according to government figures released on Monday.
Since 1979-80, when the Indian economy shrank by 5.2%, this is the first full-year contraction in the last four decades. This is also India’s second consecutive quarter of growth since emerging from a rare recession.
India’s GDP increased by 3% in the fourth quarter of FY20, bringing the overall growth rate to 4%, an 11-year low.
The manufacturing sector’s gross value added (GVA) growth surged to 6.9% in the fourth quarter of 2020-21, compared to a decrease of 4.2% a year ago, according to statistics from the National Statistical Office.
GVA growth in the agricultural industry was 3.1% in 2019-20, compared to 6.8% in the previous year.
GVA in the construction sector increased by 14.5 %, up from 0.7 % previously. The mining industry shrank by 5.7%, compared to 0.9% a year ago.
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In the fourth quarter, the electricity, gas, water supply, and other utility services segment expanded by 9.1%, compared to 2.6% growth a year ago.
Similarly, after growing by 5.7% in the previous quarter, trade, hotel, transportation, communication, and broadcasting services shrank by 2.3% in the fourth quarter.
Financial, real estate, and professional services expanded by 5.4 percent in the fourth quarter of FY21, up from 4.9 percent in the previous quarter.
Growth in public administration, defence, and other services fell to 2.3 percent in the current quarter, down from 9.6 percent a year ago.
“Real GDP, or Gross Domestic Product (GDP) at Constant (2011-12) Prices, is now expected to reach 135.13 trillion in 2020-21, compared to 145.69 trillion in the First Revised Estimate of GDP for 2019-20, announced on January 29, 2021. GDP growth in 2020-21 is expected to be -7.3 percent, down from 4.0 percent in 2019-20 “In a statement, the Ministry of Statistics and Programme Implementation said.
“GDP at constant (2011-12) prices is anticipated to be Rs 38.96 trillion in Q4 2020-21, up from Rs 38.33 trillion in Q4 2019-20, indicating a 1.6 percent increase.”
The government’s efforts to stem the pandemic’s spread, according to the statement, have had an impact on economic activity as well as data collection procedures.
The economy will need to grow by 10-11 percent in the current fiscal year 2021-22 to regain its Rs 145 trillion size, but the outbreak of the second wave of COVID infections last month has disrupted economic activity, and many analysts believe the GDP will not reach double digits despite the low base.
GDP is calculated as the sum of gross value added (GVA) at basic prices plus all product taxes minus all product subsidies. Non-GST and GST revenue are included in the overall tax revenue used to calculate GDP.
As of Monday, India had registered 28 million COVID-19 infections, second only to the United States, and 329,100 deaths, albeit the rate of increase, has slowed.
Manufacturing, construction and finance, real estate, and other sectors showed signs of improvement in Q4FY21, indicating that the economy is on the mend for FY22. However, growth may be stifled if the second wave results in the closure of the services sector in particular.