India’s GDP may contract by 1.5% in FY21, says RBI survey

New Delhi: A survey released by the Reserve Bank has showed that Indian economy may contract by 1.5 percent in FY21 though the next fiscal is expected to be much better.

"Real gross domestic product (GDP) is likely to contract by 1.5 per cent in 2020-21 but is expected to revert to growth terrain next year, when it is likely to grow by 7.2 per cent," said the Survey of Professional Forecasters (SPF) sponsored by the RBI.

It added that real gross fixed capital formation (GFCF) is likely to register negative growth of 6.4 per cent in 2020-21 but is expected to grow by 5.6 per cent in 2021-22.

Real gross value added (GVA) is expected to decline by 1.7 per cent this fiscal but record 6.8 per cent growth in 2021-22, supported by uptick in industrial and services sector activities, said the SPF survey based on response of 24 panellists.

The study added that Real private final consumption expenditure (PFCE) is expected to decline by 0.5 per cent during 2020-21 but likely to record 6.9 per cent growth during 2021-22

Headline consumer price index (CPI) inflation is expected at 5.6 per cent in Q1:2020-21, but moderate thereafter to 2.8 per cent by the fourth quarter of 2020-21, the study said

“CPI inflation excluding food and beverages, pan, tobacco and intoxicants and fuel and light is expected at 3.8 per cent in Q1:2020-21 and moderate gradually to 3.1 per cent by Q4:2020-21,” it added.

The RBI has also released two other surveys –one on Consumer confidence and the other on Households' Inflation Expectations Survey.

RBI survey has showed that consumer confidence has collapsed to historic low amid the coronavirus pandemic

"Consumer confidence collapsed in May 2020, with the Current Situation Index (CSI) touching historic low and the one year ahead Future Expectations Index (FEI) also recording a sharp fall, entering the zone of pessimism," the Consumer Confidence Survey (CCS) released by the RBI said.

The study on 'Households' Inflation Expectations Survey' found that households' median inflation perception and expectations increased sharply in May 2020 as compared with the March 2020 round of the survey.