India’s economy is set to face the steepest decline on record in the current financial year ending March 31, after the Covid-19 pandemic wreaked havoc on almost every sector barring agriculture, which is forecast to grow at 3.4%. Services, the mainstay of the country’s economy, may witness a sharp contraction of over 21%.
The gross domestic product (GDP) will contract 7.7% in 2020-21, the government said as part of its first advance estimates on Thursday. The forecast is almost similar to what the Reserve Bank of India (RBI) had estimated last month (7.5%).
The economy had shrunk 23.9% in April-June quarter last year soon after the pandemic hit the globe but it recovered and registered a 7.5% decline in the July-September period.
Electricity is another sector that is likely to grow at 2.7% but mining and construction may contract over 12%. Trade, hotels, transport and communication, also known as services, may shrink 21.4%. Private final consumption expenditure, a barometer of consumer spending, is seen declining 9.5%.
The first advance estimates provide a major input to finance ministers in working out their fiscal math for the Union Budget of the following year.