Economic Growth during FY20
In the FY20 GDP growth was mere 4.2 per cent dragged down by the 3.1 percent growth in the January-March quarter. The revised the growth issued by the government for the first three quarters of FY20 are 5.2% in Q1, 4.4% in Q2 and 4.1% in Q3. The growth numbers were the lowest in past decade. In the previous financial year 2019 economy had grown at 6.1 per cent. Together with the contraction of exports by 3%, Private Final Consumption Expenditure contracted to 5.3 percent and the Gross Fixed Capital Formation was also contracted by 2.8 per cent highlighting the weakness of the Indian economy.
Effect of lockdown on Industries
Many industries such as tourism, aviation, hospitality as well as MSME sector were directly burdened by the losses during lockdown and the effect of pandemic on their businesses leading to high losses and loss of jobs within such sectors. Many industries, such as construction and automation were already under huge losses, had to completely stop their production. Talking with numbers, the overall growth was considerably slow for almost all industries. The hospitality sector expanded this year by only 2.6 percent. For the year of FY20, the manufacturing sector recorded nil growth. The agriculture sector grew by 5.9 per cent in the fourth quarter.
The economic growth at 5 percent for the present fiscal year (FY21) has been estimated as 5% along with a contraction of 45 per cent in the Q1.
The Indian Government has announced a INR 200 Lakh crore package which mainly aims at medium & long term growth and short term stimulus is only INR 20 Lakh crore. In addition to this, a INR 21 lakh crore package has been announced to offer credit guarantee to the falling MSME sector, the repo rate has been reduced to 4 per cent.
Shaktikanta Das, The Governor of RBI, has said that economy has been badly affected by the disruption in supply and compression in demand. The RBI has projected a negavtive growth rate for FY21 and expects that the growth impulses to improve in the second half of the fiscal year.