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  3. India's economy contracts 7.3% in FY21; grows 1.6% in January-March period

India's economy contracts 7.3% in FY21; grows 1.6% in January-March period

01 Jun 2021 Evaluate

India's economy contracted by less-than-expected 7.3 per cent in the fiscal year ended March 2021 after growth rate picked up in the fourth quarter, just before the world's worst outbreak of coronavirus infections hit the country. The gross domestic product (GDP) in Asia's third-largest economy grew by 1.6 per cent in the January-March period, up from 0.5 per cent in the previous quarter when India began pulling out of a steep pandemic-induced recession in the earlier six months. GDP had grown by 3 per cent in the January-March quarter in the previous year.

The economy, which was facing a slowdown even before the pandemic broke out last year, contracted by 7.3 per cent during April 2020 to March 2021 fiscal (FY21), weighed down by a nationwide lockdown that pummelled consumption and halted most economic activities. This is the first full-year contraction in the Indian economy in the last four decades since 1979-80, when GDP had shrunk by 5.2 per cent. The economy had grown by 4 per cent in the previous 2019-20 fiscal. Prior to that, the GDP expanded by 8.3 per cent in FY17 before slipping to 7 per cent in the following fiscal and to 6.1 per cent in 2018-19.

According to data released by the National Statistical Office (NSO), India's real GDP contracted to Rs 135 lakh crore in FY21 (2020-21) from Rs 145 lakh crore at the end of March 2020. According to data, gross value added (GVA) growth in the manufacturing sector accelerated to 6.9 per cent in the fourth quarter of 2020-21 compared to a contraction 4.2 per cent a year ago. 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 percent.

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