According to data released by the government on Monday, the Indian economy grew by 1.6 percent in the January-March quarter (Q4 FY21) compared to the previous year, but contracted by 7.3 percent for the entire fiscal year, the worst in more than 40 years. The Indian economy expanded in Q4 of FY21, as predicted by analysts, and is now in positive territory for the second consecutive quarter after being in negative territory for the previous two.
The Indian economy shrank by 7.3 percent in2020-21, compared to 4% growth in2019-20, demonstrating the effect of the coronavirus pandemic. In its first advance projections of national accounts, published in January this year, the National Statistical Office (NSO) forecasted a 7.7% contraction in GDP in 2020-21. In its second updated projections, it predicted an 8% decline in 2020-21.
According to a Reuters poll of 29 economists, Asia’s third-largest economy grew 1.0 percent year on year in the March quarter, up from 0.4 percent the previous quarter, when India started to emerge from a deep pandemic-induced recession in the previous six months. However, the second wave of infections and deaths in the world’s second-most-affected nation has prompted forecasters to lower their expectations for the coming months.
After the resurgence forced most manufacturing states to implement lockdowns, putting millions out of jobs, the median forecast for April-June growth is 21.6 percent, down from a month-earlier projection of 23 percent. According to Reuters, economists have lowered their median forecast for the fiscal year to March 2022 from 10.4% to 9.8%.India’s economy contracted during the first half of FY21, after being hit by the coronavirus pandemic and a national lockdown enforced to stop the spread of infections last year, before rebounding with 0.4 percent growth in the October-December quarter. In April-June, the economy shrank by 23.9 percent, improving to 7.5 percent contraction in July-September.
The Central Statistics Office (CSO), which publishes the data, forecasted an 8% contraction in GDP in FY21, meaning a 1.1 percent contraction in the March quarter. In the meantime, the Reserve Bank of India (RBI) forecasted a 7.5% contraction in FY21.
On Thursday, the Reserve Bank of India (RBI), which has maintained a loose monetary policy while increasing liquidity in the economy, stated that India’s growth prospects will be determined by how quickly it can combat infections. Nirmala Sitharaman, the Union Finance Minister, who is working with limited resources due to a drop in tax collections and increasing public debt, said on Friday that no decision has been made on another stimulus package.
