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India’s GDP Likely to Contract by 6.4% in 2020-21 due to Lockdown: Care Ratings

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India's GDP may contract by 6On July 02, 2020, CARE Ratings Limited ( formerly Credit Analysis and Research Limited) in its report, ‘Revised GDP growth projections for FY21’ has projected a 6.4 % contraction (or -6.4%) in India’s GDP (Gross Domestic Product) growth for the current financial year FY 21 (2020-21) due to the continuous lockdown imposed for prevention of coronavirus (COVID-19) epidemic.
Earlier in May 2020, the agency had predicted a 1.5 to 1.6 % decline in GDP for 2020-21.

2/3 of economic sector will operate at 50-70 % capacity:

As per the report , two-thirds of economic sector will operate at 50–70 % capacity by the end of the third quarter (Q3) of FY21. The other sectors cannot even reach this level.
Services such as hospitality, tourism, entertainment, travel are estimated to takelong time to start functioning and get closer to normal levels.

Estimates of good growth in agriculture sector:

Although it has been predicted that there will be positive 2.5% growth in the agricultural sector in FY 21, farmers’ income will not increase due to higher agricultural production. This is because excess supply can lead to a reduction in prices.

Fears of decline in many sectors:

The report also stated that the secondary sector, including manufacturing, mining and electricity, could face a sharp contraction of 9.5 % in FY 2021. The service sector, including construction, may shrink by 6.5 % in the same period.

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