The Finance Ministry has revealed that the Gross Domestic Product (GDP) estimates suggest a continued upturn in the country’s economic activity during the second half of 2020-21. It said that there is a V-shaped recovery observed post-lockdown period.
The ministry brought the GDP estimates to light while talking about the first Advance Estimate (AE) of the National Statistical Office’s national income. The report projects a 7.7% contraction in GDP during Q3 and Q4 of FY 2020-21. The quarter-on-quarter growth in GDP acts as evidence for the country’s economic fundamentals’ strength, the ministry mentioned.
Further, the ministry said that many high-frequency indicators have been signalling the possibility of a broad pathway for a resurgence in economic activity. The pandemic situation has turned out to be much more manageable in India compared to other advanced countries adding more momentum for economic recovery.
Speaking of the demand side, the ministry shared that the real GDP in 2020-21 is increased by 5.8% due to the increase in Government Consumption Expenditure. Whereas, agriculture is estimated to register a growth of 3.4% against the benchmark of 4% as per the provisional estimate on the supply side.
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The data showed that the electricity sector might register a growth of 2.7% in the manufacturing sector. On the other hand, it was estimated that the services sector deeply affected due to the pandemic, such as trade, hotels, transport, and communications, will register a fall by 21.4%.
The major cause for the GDP upturn is that two COVID-19 vaccinations have received emergency usage approval in India. The government is preparing for a mass vaccination drive while keeping caution and COVID-appropriate behaviour and surveillance as the utmost priority. The same has given a sense of confidence in the general public, causing the economic activities to revive in the country.
For any clarifications/feedback on the topic, please contact the writer at apoorva.n@cleartax.in
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