Question : According to Ecowrap(State Bank of India’s research report) real GDP of India likely to contract by —
(a) 10.9 per cent in financial year 2021
(b) 9.2 per cent in financial year 2021
(c) 8.7 per cent in financial year 2021
(d) 7.2 per cent in financial year 2021
Answer (a)
Related facts —
- ’Ecowrap’ is released on 1 september 2020.
- It is a State Bank of India’s research report.
Key findings
- After the country’s economy contracted by a record 23.9 per cent in April-June quarter, real GDP for FY21 is expected to shrink by 10.9 per cent.
- It had earlier estimated real gross domestic product (GDP) at (-) 6.8 per cent for the current fiscal.
- The first quarter GDP contraction compares with 3.1 per cent growth in the preceding January-March quarter and 5.2 per cent expansion in the same period a year back.
- It estimates Q2 real GDP decline in the range of (-) 12 per cent to (-) 15 per cent, while Q3 GDP is seen between (-) 5 per cent and (-) 10 per cent. Q4 is expected to be in (-) 2 per cent to (-) 5 per cent range.
- The report said the country’s GDP growth plunged to 23.9 per cent in Q1 FY21 due to the nationwide lockdown imposed on March 25, 2020, in the wake of the COVID-19 pandemic and is much worse than market and its estimates.
- “Assuming that it remains at 57 per cent of GDP in nominal terms, we will see at least around 14 per cent decline in PFCE(private final consumption expenditure) growth in FY21, as against an average of 12 per cent growth for the nine-year period ended FY20,” the report said.
- This indicates an average swing of 26 per cent in current fiscal indicating a consumption washout, it added.
By — Pankaj Pandey.