Real GDP growth of 0.4 per cent in Q3 of 2020-21; Economy returns to the pre-pandemic times of positive growth rates: Ministry of Finance

Ministry of Finance:

2nd Advance Estimates of National Income 2020-21 and Estimates of Q3:

Real GDP growth of 0.4 per cent in Q3 of 2020-21;

Economy returns to the pre-pandemic times of positive growth rates

It is also a reflection of strengthening of V-shaped recovery starting in Q2 of 2020-21, after a large GDP contraction in Q1 due to a stringent lockdown imposed by Government relative to other countries.

The 2nd advance estimates the contraction of GDP at 8.0% in 2020-21.

While GFCF has improved from a contraction of 46.4 per cent in Q1 to a positive growth of 2.6 per cent in Q3, PFCE has recovered from a contraction of 26.2 per cent in Q1 to a much smaller contraction of 2.4 per cent in Q3.

The fiscal multipliers associated with Capex are at least 3-4 times larger than Government Final Consumption Expenditure (GFCE) as Capex induces much higher consumption spending than normal income transfers.

However, GFCE has played a critical role since April, 2020 as apart from supporting lives and livelihoods it provided the initial stimulus to the economy.

Real GVA in manufacturing has improved from a contraction of 35.9 per cent in Q1 to a positive growth of 1.6 per cent in Q3 while in construction the recovery has been from a contraction of 49.4 per cent in Q1 to a positive growth of 6.2 per cent in Q3.

Real GVA in Services has also improved from a contraction of 21.4 in Q1 to a negligible contraction of 1.0 percent in Q3 of 2020-21.

Real GVA in Agriculture continues to provide vital support to the economy having grown from 3.3 per cent in Q1 to 3.9 per cent in Q3.

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