GDP shrinks 7.3% in FY21; Q4 growth 1.6%

Roshan Kishore and Rajeev Jayaswal

The Indian economy contracted by 7.3% in the fiscal year 2020-21, according to the GDP statistics released by the National Statistical Office on May 31, the worst ever economic performance on record, but still better than expectations. The NSO put this number at 8% in its last release in February.

The latest GDP numbers and provisional fiscal numbers suggest that the 2021-22 Budget presented on February 1 was conservative in its projections of the 2020-21 economic performance. Both the level of nominal GDP and Gross Tax Revenue are higher than what was projected in the Budget. The gross fiscal deficit of the government in 2020-21, as per the provisional estimates released by the Controller General of Accounts, is ₹18.21 lakh crore compared to the ₹18.48 lakh crore according to the revised estimates given in this year’s Budget. Which means it is 9.3% of GDP, not the

NEW DELHI:

expected 9.5%.

This relative improvement in 2020-21 GDP estimates is due to a better performance in the last quarter (January-march) of 2020-21 which saw GDP growth increase to 1.6%. GDP contracted by 24.4% and 7.4% in the first and second quarters of 2020-21, and grew by 0.5% in the third quarter.

A fiscal push on capital spending and some green shoots in private spending seem to have played an important role in the faster than expected recovery in the quarter ending March 2021. To be sure, NSO has underlined the possibility of “implications on subsequent revision of these (GDP) estimates” as “the statutory timelines for filing the requisite financial returns of fourth quarter have been extended” due to the eruption of the second Covid-19 infections.

That’s the good news.

The bad news is that the second wave of Covid-19 infections