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GDP likely to contract 9.5 per cent in FY21: RBI

The Reserve Bank expects the GDP to contract by 9.5 per cent in the current financial year due to the impact of the coronavirus pandemic on domestic as well as global economies.

Unveiling the bi-monthly monetary policy statement, RBI Governor Shaktikanta Das said that GDP was likely to turn positive at 0.5 per cent in the January-March quarter of the current financial year.

“Taking into consideration (various factors) and the uncertain COVID-19 trajectory, real GDP growth in 2020-21 is expected to be negative at (-)9.5 per cent, with risks tilted to the downside: (-)9.8 per cent in Q2:2020-21; (-)5.6 per cent in Q3; and 0.5 per cent in Q4. Real GDP growth for Q1:2021-22 is placed at 20.6 per cent,” he said.

The economy contracted 23.9 per cent in the April-June quarter of the current fiscal, mainly on account of the disruption in normal business activities following the lockdown to check spread of the coronavirus.