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India's GDP contracted 6.6% in FY21, lower than previously estimated

The first revised estimate for FY21 also pulls down the GDP growth estimate for FY22 to 8.8 percent from the first advance estimate of 9.2 percent.

January 31, 2022 / 07:38 PM IST

India's Gross Domestic Product (GDP) contracted by 6.6 percent in FY21, according to the National Statistical Office's first revised estimate released on January 31.

The revised estimate compares favorably with the provisional estimate of a 7.3 percent contraction, released in May 2021.

The first revised estimate is compiled using institution-wise detailed data instead of the benchmark-indicator method, which is employed to arrive at the provisional estimate.

In nominal terms, the GDP is now estimated to have shrunk by 1.4 percent in FY21 as against the provisional estimate of a 3.0 percent contraction.

A downward revision was also made to the GDP growth figure for FY20. Now, India's GDP is estimated to have grown 3.7 percent in FY20, down from 4.0 percent estimated previously.

The bulk of the upward revision for the GDP in FY21 seems to have come from the manufacturing sector, which was earlier estimated to have contracted by 7.2 percent in FY21. However, as per the first revised estimate, the manufacturing sector contracted by a mere 0.6 percent last year.

"Estimates of secondary sector have undergone upward revision due to availability of additional data in respect of companies post PE (provisional estimate) FY21 release and revision in input data by source agencies. At the time of compilation of PE, major input data was sourced from IIP besides financial results of limited number of listed companies particularly for Q4 FY21," the National Statistical Office said.

The secondary sector comprises of manufacturing, electricity, gas, water supply and other utility services, and construction.

Growth in FY21 as per 1st revised estimateGrowth in FY21 as per provisional estimate
Nominal GDP-1.4%-3.0%
Personal final consumption expenditure-6.0%-9.1%
Government final consumption expenditure3.6%2.9%
Gross fixed capital formation-10.4%-10.8%
Agriculture, forestry, fishing3.3%3.6%
Mining, quarrying-8.6%-8.5%

The first revised estimate for FY21 also impacts the GDP growth estimate for FY22. As per the National Statistical Office's first advance estimate, India's GDP was seen growing 9.2 percent in FY22. However, the first revised estimate for FY21 implies a real GDP growth rate of 8.8 percent for the current financial year.

The implied nominal GDP growth rate for FY22 is now 17.2 percent as against the first advance estimate of 17.6 percent.

Siddharth Upasani
first published: Jan 31, 2022 07:38 pm