Advance Estimates of GDP of 2020-21 released by National Statistics Office

Movement of various high frequency indicators in recent months, points towards broad based nature of resurgence of economic activity

The National Statistics Office (NSO) released the first Advance Estimates (AE) of GDP for the year 2020-21. The real GDP at 2011-12 prices in 2020-21 has been estimated to contract by 7.7 per cent and nominal GDP at current prices by 4.2 per cent.

As per quarterly estimates of NSO, real GDP contracted by 15.7 percent in first half of 2020-21. Real GDP on a quarter-on-quarter basis grew at 21 percent from Q1: FY 2020-21 to Q2: FY 2020-21. TheAE of 2020-21reflect continued resurgence in economic activity in Q3 and Q4 – which would enable the Indian economy to end the year with a contraction of 7.7 percent.  The continuous quarter-on-quarter growth endorses the strength of economic fundamentals of the country to sustain a post-lockdown V-shaped recovery.

On the demand side, real GDP in 2020-21 has been supported by an estimated increase in Government Consumption Expenditure by 5.8 percent. On the supply side, agriculture is estimated to register a positive growth of 3.4 percent against 4.0 percent as per the PE of 2019-20. In the manufacturing sector, electricity sector is estimated to register a positive growth of 2.7 percent. The pandemic and associated public health measures have adversely affected the contact-sensitive services sector where trade, hotels, transport & communication are estimated to contract by 21.4 percent in FY:2020-21.

The table below shows real GDP/GVA growth rates on the demand and supply side in 2020-21 (AE) as compared to 2019-20 (PE)

Demand Side GDP	Real Growth(%) in 2020-21	Supply Side GVA	Real Growth (%) in 2020-21
Private Consumption	-9.5	Agriculture	3.4
Government Consumption	5.8	Mining	-12.4
Fixed Investment	-14.5	Utilities	2.7
Exports	-8.3	Manufacturing	-9.4
Imports	-20.5	Construction	-12.6
		Services	-8.8

The movement of various high frequency indicators in recent months, points towards broad based nature of resurgence of economic activity. The relatively more manageable pandemic situation in the country as compared to advanced nations has further added momentum to the economic recovery.

As two vaccines get emergency use approval in India, the government is undertaking preparations of a mass mega vaccination drive. However, while the impending vaccination is drawing closer, continued observation of “covid-appropriate” behaviour, caution and surveillance is crucial.

GDP contraction signals sectoral weaknesses despite resurgence in activity and government consumption supporting recovery measures. Advance estimates place real GDP for 2020-21 at a contraction of 7.7 percent and nominal GDP at a contraction of 4.2 percent. Demand-side movements show Government Consumption rising while Private Consumption, Fixed Investment, exports and imports decline sharply. Supply-side figures record positive growth in agriculture and utilities, contractions in manufacturing and construction, and severe losses in contact-intensive services. High-frequency indicators indicate broad-based resurgence, with vaccine preparations and sustained public-health measures cited as important for sustaining recovery.