India Economy set to contract 7.7pc, biggest decline since 1952

Battered by the global economic slowdown created due to the coronavirus pandemic, the Indian economy is expected to contract by 7.7 percent, the biggest annual decline recorded since 1952.

As per the Indian statistic ministry's first advance estimate, the Indian Gross Domestic Product (GDP) will shrink by 7.7pc in the financial year ending March 2021, which is higher than the earlier 7.5pc decline forecasted forecast by the central bank of India.

The Indian statistic office has however stated that the estimated figures could be revised amid disruptions caused by steps to contain the pandemic.

“While weak global growth and a sudden volteface on domestic pandemic control are key short term risks, over the medium term, easier financial conditions, stronger global demand and accelerated vaccinations could lead to an economic upcycle in 2021,” wrote Sonal Varma and Aurodeep Nandi, economists at Nomura Holdings Inc in Singapore, quoted Bloomberg.

As per Indian Express, out of the total eight sectors, only agriculture and electricity generation are projected to be in positive territory, with an estimated growth rate of 3.4 per cent and 2.7 per cent respectively.

Meanwhile, except for government final consumption expenditure, the demand in other sectors have dropped sharply, with private consumption expenditure expected to decline 9.5pc.

It is pertinent to mention that despite launching one of the strictest coronavirus lockdowns, India failed to contain the spread of COVID-19 and is now home to the world’s second-highest virus infections.

The contraction in the India’s GDP is set to be the worst slump in Asia after Philippines’ forecasted 8.5pc-9.5pc decline.