India’s economy beats Covid blues to post 1.6% growth in Jan-March quarter of FY 21

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Driven by strong recovery in sectors such as manufacturing and construction, India posted a 1.6 per cent growth in the fourth quarter of 2020-21. For the full financial year, India’s economy declined by 7.3 per cent as compared to an expansion of 4 per cent in 2019-20, as per provisional data released by the National Statistics Organisation (NSO).</p>
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“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%,” an official statement said.</p>
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As the country posted growth in two consecutive quarters – in the October-December quarter, India’s GDP expanded by 0.4 per cent – India is officially out of a recession mode.</p>
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The manufacturing sector grew by 6.9 per cent and construction by 14.5 per cent. The agriculture, forestry and fishing sector expanded by 3.1 per cent.</p>
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While amid an unprecedented health crisis driven by the Covid 19 pandemic, this is the worst economic performance by India in over four decades, the growth numbers are far better than projections made earlier by several think tanks.</p>
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“Annual numbers signify a revival in demand," Chief Economic Advisor Krishnamurthy Subramanian said. He also said that rural demand has been resilient, which has helped the economy.</p>
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India’s economy shrunk by 24.3 per cent in the April-June quarter of FY 21, while in the second quarter it contracted by 7.5 per cent.</p>
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Earlier, the NSO in its first advance estimates had projected a GDP contraction of 7.7 per cent for FY 21. In its second revised estimates the NSO projected a contraction of 8 per cent. The Reserve Bank of India too projected a 7.5 per cent contraction for FY21. However, the State Bank of India had predicted a 1.3 per cent growth in the fourth quarter.</p>
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EY India said that the provisional growth numbers for 2020-21 have brought in cheer for the country’s policymakers.</p>
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“The 2020-21 real GDP growth now estimated at (-)7.3 per cent has done better than the earlier estimate of (-)8.0 per cent as per the second advance estimates. This became possible due to a better-than-expected performance in 4Q of 2020-21 where the GDP growth turned out to be positive at 1.6 per cent as against the earlier estimate of (-)1.1per cent,” DK Srivastava, chief policy adviser, EY India said.</p>
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However, the economic growth in the first quarter of the current financial year could be impacted due to the Covid 19 second wave and the subsequent lockdowns imposed by several states. Economists have underlined the need to press the pedal on vaccination drive to contain the spread of the virus.</p>