India's GDP Contracts by Record 7.3% in 2020-21

Government estimates released on Monday shows that India’s GDP Recorded its worst ever performance in over four decades, contracted by 7.3% in 2020-21. While the pandemic has hit growth in countries across the world, several trends over the last decade shows that the Indian economy was already worsening in the years before Covid-19.The GDP had slipped into a technical recession in the first two quarters of FY 20–21 by contracting 24.4 per cent and 7.4 per cent respectively.

India’s gross domestic product (GDP) grew 1.6% in the fourth quarter i.e. January-March of 2020. This comes on top of a 0.5%growth in the previous October-December quarter

“Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in the year 2020-21 is now estimated to attain a level of Rs.135.13 lakh crore, as against the First Revised Estimate of GDP for the year 2019-20 of Rs.145.69 lakh crore, released on 29th January 2021.

Expenditure trends

Private consumption, reflected in private final consumption expenditure, rose2.7% in 4^th Qtr. compared to a Contraction of 2.8% in 3^rd quarter. For the full year, private consumption contracted 9.1%.

Investments, as reflected by gross fixed capital formation, rose 10.9% in 4^th Qtr. after rising by 2.6% in 3^rd quarter. Investments contracted by 10.8% for the full year.

Government final consumption expenditure grew 28.3% in 4^th Qtr. after contracting 1.1% in 3^rd quarter. For the full year, it rose by 2.9%.

Sectoral Trends

Agriculture sector grew at 3.1% in 4^th Qtr. compared to 4.5% in 3^rd Qtr. The sector grew 3.6% for the full year.

Mining sectorcontracted by 5.7% in 4^th Qtr. compared to a contraction of 4.4% in the previous Quarter. Mining contracted by 8.5% annually.

Manufacturing grew by 6.9% in 4^th Qtr. compared to 1.7% in the 3^rd Qtr. For the full year, the sector contracted by 7.2%.

Construction grew 14.5% in 4^th Qtr. compared to 6.5% in the 3^rd Qtr. The sector contracted by 8.6% in the full year.

Trade, hotel, transport, communication contracted by 2.3% in 4^th Qtr. compared to a contraction of 7.9% in the 3^rd Qtr. Contraction for the full year was at 18.2%.

Financial services sector grew at 5.4% compared to 6.7% in the 3^rd Qtr. For the full year, the sector contracted by 1.5%.

Sources