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.
- 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
