India’s GDP to Contract 7.8% in FY 2021, Technical Recession to end in Fourth Quarter if Current Fiscal: Icra


PTI, Dec 17, 2020, 8:16 PM IST

Domestic rating agency Icra Ratings expects the technical recession in the country’s economy to end in the fourth quarter of the current fiscal, limiting the contraction in the GDP to 7.8 per cent in the financial year 2021. In the second quarter of financial year 2021, GDP contracted 7.5 per cent as against a decline of 23.9 per cent in the April-June quarter.

With a steady performance of the agricultural sector and a lagged recovery in the contact-intensive parts of the services sector, the agency forecasts a small contraction of one per cent in the Indian GDP in the third quarter of financial year 2021. The rating agency’s Principal economist Aditi Nayar said healthy procurement and a favourable outlook for the rabi season, as well as greater visibility of an approaching COVID-19 vaccine rollout, will strengthen demand and economic activity in the fourth quarter of financial year 2021. The technical recession is likely to end in that quarter (Q4), with a muted 1.3 per cent growth benefiting from a real recovery as well as the low base effect. This is expected to limit the contraction in Indian GDP in real terms to 7.8 per cent in FY2021, Nayar said in a report

After the NSO had released the GDP data for the second quarter in financial year 2021, the rating agency had projected the GDP contraction in financial year 21 to range between 7-9 per cent. With the updated projections for Q3 and Q4 financial year 2021, it has now pegged GDP contraction in financial year 2021 at 7.8 per cent. Nayar further said the spending seen during the festive season was driven by pent-up demand, and consumption is yet to fully stabilise in various sectors. While many indicators have displayed growth in the ongoing quarter relative to a weak performance in the same period in FY2020, volumes still remain below FY2019 levels in a number of sectors, highlighting that a full recovery remains somewhat distant, she said. The rating agency said that supply-side and logistical disruptions have re-emerged in some states. Further, the tailwinds of low commodity prices are turning into headwinds, as the visibility of vaccine availability is now pushing up global commodity prices, it said.

Nayar said exports, which faltered in the third quarter of financial year 2021, given the renewed restrictions in many key trading partners and logistical constraints, may revive modestly in Q4 financial year 2021, as the vaccine rollout gathers traction. A pick-up in revenue visibility is expected to boost the spending of the government in the rest of this fiscal, she added. Private sector investment activity may gather some pace in certain sectors but may not revive in a broad-based manner this fiscal, Nayar noted.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

Wanted to kill Ajmal Kasab who caused so much of pain, recalls 26/11 terror attack victim

Two retired revenue officials among four arrested in land grabbing case in Jammu

Kerala govt to revise manual for junior doctors, house surgeons

State can interfere with religious practices if they impede development, equality rights: SC

Four cheers at MP’s Kuno park; cheetah Neerva gives birth to cub quartet

HC directs Delhi govt to appoint ex-officio members to state mental health authority

‘Challenge after 44 years’: Supreme Court junks pleas against ‘socialist’, ‘secular’ in Preamble

Related Articles More

Sensex reclaims 80k mark; Nifty surges over 1% after BJP-led Mahayuti’s win in Maharashtra

Rapid digital expansion to create over 1 lakh new jobs in fiber tech in India in next 5 years

Choose correct ITR to report foreign assets; 2 lakh such returns filed: CBDT official

Air India Express increases flight operations from northeast destinations

Mcap of 8 of top-10 most-valued domestic firms jumps Rs 1.55 lakh cr; HDFC Bank, TCS sparkle

MUST WATCH

Coconut Flower

Prakash Belawadi

Naxal Leader Vikram Gowda

Christmas Cake Fruit Mixing

DK Shivakumar


Latest Additions

Wanted to kill Ajmal Kasab who caused so much of pain, recalls 26/11 terror attack victim

Two retired revenue officials among four arrested in land grabbing case in Jammu

Kerala govt to revise manual for junior doctors, house surgeons

State can interfere with religious practices if they impede development, equality rights: SC

Four cheers at MP’s Kuno park; cheetah Neerva gives birth to cub quartet

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.