Don't expect GDP growth to turn positive in FY21: Nirmal Bang

The GDP growth in the April-June quarter is likely to decline by around 16.8 percent year-on-year, according to a research report by Nirmal Bang .

August 28, 2020 / 05:29 PM IST

The Central Statistical Organisation will release the gross domestic product (GDP) data for the June quarter of FY21 on August 31, which will reflect the economic impact of the lockdown that started on March 25 and is being eased in a phased manner. The GDP in Q1FY21 is likely to decline by around 16.8 percent, YoY, according to the Nirmal Bang research report.

Highlights of the report:

Agriculture and Allied sector and public administration, defence and other services are expected to remain in the positive territory, with all other sectors witnessing a sharp contraction.

Trade, hotels, transport, and communication sectors are expected to be the worst hit with a 40 percent year-on-year (YoY) decline, pulling down the services sector (including construction) by 19.8 percent, YoY.

Led by a decline in the manufacturing sector, the industry is likely to contract by 18.5 percent YoY. Despite Q1FY21 GDP being broadly in line with our initial estimate, we are sharply revising down FY21 GDP to negative 7.8 percent from negative 3.3% on account of downward revisions from Q2 to Q4FY21.

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We do not expect growth to return to the positive territory for the whole of FY21. Our earlier estimate had assumed that growth would turn marginally positive by Q3FY21. The downward revision is on account of the fact that after the initial swift recovery, there are signs of the recovery leveling off.

Also Read: India's GDP growth has been on a slide since the last 8 quarters

The quarterly GDP is likely to witness a contraction of 16.8% in 1QFY21. However, each quarter we may see recovery in contraction but it likely to remain in negative territory in FY21.

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Moneycontrol News
first published: Aug 28, 2020 05:29 pm

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