NEW DELHI – India's economy contracted by 7.7% in the 2020-21 financial year, battered by the coronavirus pandemic, according to a report released Friday.
The government survey estimates the economy, previously one of the fastest growing among major economies, will bounce back, growing 11% 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% 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% in 2021-22 for India and 6.8% in 2022-23,” it said.
India’s economy contracted at a 7.5% annual pace in the July-September quarter following a record slump of nearly 24% 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.