FICCI, the industrial body of India has reported India’s GDP for the year 2020-21 to -4.5% as per the economic body survey. This forecast makes a downward revision which has estimated the growth estimate to be 5.5 percent reported earlier this year in January.
The revision cut has appeared on account of Corona pandemic which has affected the manufacturing as well as other sectors completely.
This announcement is seen as a sharp contrast to what RBI Governor Shashikant Das has said in SBI Conclave last week.
“It is still uncertain, when will supply chains be restored fully; how long will it take for demand conditions to normalise and what kind of durable effects the pandemic will leave behind on our potential growth.”, expressed RBI Governor.
As per the latest FICCI’s Economic Outlook Survey, the median GDP growth forecast or 2020-21 has been put up at (-) 4.5 percent, with a minimum and maximum GDP of (-) 6.4 percent and 1.5 percent respectively while the quarterly median forecasts indicate GDP growth to contract by (-)14.2 percent in the first quarter of 2020-21.
The only silver lining seems to be in agriculture sector, whose growth has been estimated at 2.7%.
The survey was conducted in June 2020 and drew responses from leading economists representing industry, banking and financial services. As per them, the absence of demand stimulus, a second wave of the pandemic and continuation of social distancing and quarantine measures will weight heavy on growth prospects.
What Experts Said About GDP in the Survey
The participants of the survey were of the view that government measures in stimulus were more on saving lives and undertaking deep structural reforms whose ground implementation will take a long time to work through the present environment. Majority of economists believed that the government could have undertaken aggressive reforms than those announced in the two packages.
The experts also suggested that efforts towards liberalisation of FDI policy with improving infrastructure and ease of doing business can help in boosting the economy with keeping more focus on demand creation.
