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CARE Ratings projected 1.1%-1.2% GDP growth in FY21; declined for FY20 to 4.7% from 5%

On April 24, 2020, the CARE Ratings has projected the gross domestic product (GDP) of India for Fiscal Year (FY) 2020-2021 between 1.1%-1.2% amid nationwide lockdown resulting in disruptions and halting of activities. The lockdown was announced on March 24 for 21 days, which has now been extended until May 3, 2020.CARE Ratings expects GDP growth

  • Gross Value Added (GVA) has been estimated to grow at 1.4% for FY21.
  • Overall growth is expected to be driven only by the government expenditure.

Revision in FY20 GDP; Declined to 4.7%
The agency also revised the GDP forecast for FY20 by declining it to 4.7% from 5% with GVA growth expected at 4.6%.

Key Points:

-CARE has assessed 8 sectors for GDP projection of FY21 out of which 3 sectors are anticipating a decline viz. mining and quarrying, manufacturing and construction.

-During the year, tax collections will be low as the target of Rs. 1 lakh crore of GST per month may not be achieved due to restrictions imposed by states on non-essential commodities amid COVID-19.

-This estimate is based on the assumption that post June 2020, the activities would restore very gradually and may not be able to even attain 50% of normalcy for certain sectors for FY21.

Table showing sector-wise growth and de-growth in 8 sectors

Sector with expectations of growth
Sector Growth Prediction Reason
Agriculture 2.5% Prediction of normal monsoon this year
Electricity, gas and water supply and other utility services 2% the retail consumption continued and demand is likely to pick up post the resumption of industrial activities
services, trade, hotels, transport, communication and services 2.2% Partial recovery expected in second half of year
Financial, real estate and professional services 0.5% Overall Muted growth due to negative growth in real estate
Public administration 10% Govt expenditure will be the only driving factor during the year
Sectors with expectations of de-growth
Mining and quarrying sector 2% Output of the sector halted due to lack of labour and social distancing norms.
Manufacturing sector 3% Witnessed halt in production
Construction 4% Getting labour back on board and completing ongoing projects is challenging

Click Here for Official GDP Estimate for FY21 by CARE Ratings

About CARE Rating:
Headquarters– Mumbai, Maharashtra
Managing Director (MD) & Chief Executive Officer (CEO)– Ajay Mahajan