INDIA’s GDP FALL

INDIA’s GDP FALL

Subject: Economics

Context: India’s Gross Domestic Product (GDP) contracted by 7.3% in 2020-21, as per provisional National Income estimates released by the National Statistical Office. GDP growth in 2019-20, prior to the COVID-19 pandemic, was 4%.

Concept:

• The Gross Value Added (GVA) in the economy shrank 6.2% in 2020-21, compared to a 4.1% rise in the previous year.
• Only two sectors bucked the trend of negative GVA growth — agriculture, forestry and fishing, which rose 3.6%, and electricity, gas, water supply and other utility services (up 1.9%).
• GVA for trade, hotels, transport, communication and broadcasting-related services saw the sharpest decline of 18.2%, followed by construction (-8.6%), mining and quarrying (-8.5%) and manufacturing (-7.2%).

Significance

• Though this is the bleakest performance on record for the economy, the fourth quarter (Q4) of 2020-21 helped moderate the damage, with a higher-than-expected growth of 1.6% in GDP.
• This marked the second quarter of positive growth after the country entered a technical recession in the first half of the year.
• GDP had contracted 24.4% in April-June 2020, followed by a 7.4% shrinkage in the second quarter. It had returned to positive territory in the September to December quarter with a marginal 0.5% growth.