India’s economy contracted by 7.7 percent in the 2020-21 financial year, battered by the coronavirus pandemic, according to a report released Friday.
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The government survey estimates the economy, previously one of the fastest growing among major economies, will bounce back, growing 11 percent in the fiscal year that begins in April.
Finance Minister Nirmala Sitharaman presented the report to Parliament on Friday. She will present the national budget for 2021-22 on Monday.
Agriculture remained the silver lining with 3.4 percent growth, the report said.
It said the recovery would be seen in a resurgence in demand for power and steel, rail freight and tax collections on goods and services
“The economy would take two years to reach and go past the pre-pandemic level. These projections are in line with the International Monetary Fund estimate of real GDP growth of 11.5 percent in 2021-22 for India and 6.8 percent in 2022-23,” it said.
India’s economy contracted at a 7.5 percent annual pace in the July-September quarter following a record slump of nearly 24 percent in the previous three months that pulled the country into a recession. India last suffered a recession in 1979-80 after an oil shock.
A country enters a technical recession if its economy contracts for two successive quarters.
The downturn followed a strict two-month lockdown imposed across the country beginning in March to combat the pandemic. It triggered massive unemployment in small and medium-sized businesses and left farmers in distress.
The government has sought to cushion the blow from the lockdowns and virus outbreaks, introducing a $266 billion package in May to boost consumer demand and manufacturing. A large part of the package was actually loans provided by banks, many of them without collateral.
That was followed by a $35.14 billion package to stimulate the economy by boosting jobs, consumer demand, manufacturing, agriculture and exports hit by the coronavirus pandemic.
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