Moneycontrol

Budget 2021

Associate Partners:

  • SMC
  • Samsung
  • Volvo

Moneycontrol

Budget 2021

Associate Partners:

  • SMCSamsungVolvo

India's GDP to contract by 7.7% in 2020-21, says government

The first advance estimates for a financial year is usually released before the Union Budget for the next year. This data, as well as projections for the coming year, are shared by NSO with the Finance Ministry and other departments, to aid in the budget making process.

January 07, 2021 / 11:20 PM IST

The central government projects the country's economy to contract by 7.7 percent in the current fiscal year 2020-21, as per the first advance estimates of gross domestic product released by the National Statistical Office on January 7.

The agriculture sector estimate for FY 2021 stood at 3.4 percent. Also, mining estimate stood at -12.4 percent for FY21 against 3.1 percent (YoY), and nominal GDP estimate stood at -4.2 percent.

"The movement of various high-frequency indicators in recent months, points towards broad-based nature of resurgence of economic activity. The relatively more manageable pandemic situation in the country as compared to advanced nations has further added momentum to the economic recovery," the government said in a press release.

The government said that as two vaccines get emergency use approval in India, the government was undertaking preparations for a mass mega vaccination drive. However, while the impending vaccination is drawing closer, continued observation of COVID-appropriate behaviour, caution and surveillance is crucial.

"While the advance estimates of GDP for FY2021 have been based on data that is available for only the first six to eight months, the modifications made in the extrapolation process seem to have captured the impending upturn expected in the remainder of this extremely tumultuous year," Aditi Nayar, principal economist, ICRA, said.

Close

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more
Show

Among other details, the gross value added (GVA) estimate stood at -7.2 percent for FY21 against 3.9 percent in FY20. For the manufacturing sector, the estimate for FY21 stood at -9.4 percent against 0 percent (YoY). Meanwhile, the construction sector estimate for FY21 stood at -12.6 percent against 1.3 percent (YoY).

Private final consumption for FY21 has been estimated at -9.5 percent against 5.3 percent year-on-year. Government final expenditure for FY21 has been estimated at 5.8 percent against 11.8 percent year-on-year. Gross fixed capital formation for FY21 has been estimated at -14.5 percent against -2.8 percent year-on-year.

"We maintain our expectation that the Indian economy will contract by 7.8 percent in FY2021 in real terms, with the recession ending in the current quarter with a mild YoY growth. We expect the nominal GDP to contract by 4.5 percent in FY2021," Nayar said.

The first advance estimates for a financial year is usually released before the Union Budget for the next year. This data, as well as projections for the coming year, are shared by NSO with the Finance Ministry and other departments, to aid in the budget-making process.

The projections for 2021-22 will be released along with the budget on February 1, while the second advance estimates for 2020-21 will be released on February 26, along with the October-December quarter GDP data.​
Moneycontrol News
first published: Jan 7, 2021 05:57 pm
Sections