Jun 2, 20213 min read

India's GDP contracts 7.3% in FY21; grows at 1.6% in Q4

India's economy grew at 1.6 per cent in the fourth quarter of 2021-21, recording a slight pickup in GDP growth amid the Covid-19 second wave hitting the economy hard. In the full fiscal year, the economy shrunk by -7.3 per cent as the Covid-19 pandemic ravaged the economy. The contraction in FY21 GDP is worse in more than 40 years, the government data shows.

"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," the Ministry of Statistics & Programme Implementation (MoSPI) said in a statement on Monday, adding that the growth in GDP during 2020-21 is estimated at -7.3 per cent as compared to 4.0 percent in 2019-20.

The ministry said the real GDP at constant (2011-12) prices in 2020-21 is now estimated to attain a level of Rs 135.13 lakh crore against the first revised estimate of GDP for 2019-20 of Rs 145.69 lakh crore. GDP at current prices in 2020-21 is estimated at Rs 197.46 lakh crore against the first revised estimates of Rs 203.51 lakh crore in 2019-20, showing a decline of -3.0 per cent as compared to 7.8 percent growth in 2019-20, said the ministry.

GDP at constant (2011-12) prices in Q4 of 2020-21 stood at Rs 38.96 lakh crore against Rs 38.33 lakh crore in Q4 FY20, showing a growth of 1.6 per cent.

On the lines of the forecasts by professional agencies, the economy continued its expansion in the January-February quarter though the recent rise in infections played the spoilsport. This is the second consecutive quarter when the Indian economy has grown in the positive territory after negative growth in two previous quarters.

The economy has shown signs of improvement compared to the previous quarters, but the current Covid-19 situation in the country has forced the forecasters to trim their GDP projections for both Q4 and Q1 of FY22.

While most analysts had projected double-digit growth in FY22, albeit on a lower base, the second wave of COVID-19 pandemic and lockdowns imposed by state governments to control the surge in cases have led to revisions in growth estimates. For the first quarter of 2021-22, median forecasts by rating agencies and major economists stand at 21.6 per cent, which is lower than 23 per cent predicted earlier.

State-wise lockdowns and subsequent shutting down of the economy, although partially, has forced millions out of work and several small businesses to shutter down.

India's economy had contracted during the first half of FY21, before returning to positive territory in the October-December quarter with a growth of 0.4 per cent. The economy reported growth in the December quarter after two-quarters of contraction. GDP had seen revival, albeit marginally, as economic activities resumed after a long and arduous lockdown and overall sentiment improved with the rollout of the vaccination drive.

In the April-June quarter of FY21, the economy shrunk by 24.4 per cent, which improved to -7.3 per cent contraction in July-September. On a YoY basis, the Indian economy grew 4.18 per cent in FY20; 6.12 pr cent in FY19; 7.04 per cent in FY18; 8.26 per cent in FY17; and 8 per cent in FY16.

Estimates including growth rates of Q1, Q2 and Q3 of 2020-21 released earlier have been revised in accordance with the revision policy of National Accounts. The Q3 GDP growth has been revised from 0.5 to 0.4 earlier, while Q2 GDP de-growth stands at -7.4 compared to - 7.3 earlier.