InvestorQ : What does the advance estimate of GDP for the FY21 look like?
diksha shah made post

What does the advance estimate of GDP for the FY21 look like?

2 years ago

This is the first advance estimate on GDP for the financial year 2020-21, which is normally put out by the Ministry of Strategy and Program Implementation or MOSPI. Here are some key highlights of the GDP estimate for the fiscal 2020-21 that is put out by the MOSPI.

· The first advance estimates of full year GDP for the fiscal year 2020-21 have been pegged to contract by -7.7%.

· Most experts believe that this could be subject to a favorable modification based on the speed and momentum of the recovery in Dec and Mar quarters.

· Farmers could end up saving the day for full year GDP in fiscal 2021. Agriculture is expected to be the bright spot in the year with likely growth of 3.4%.

· The only other sector to show positive growth in FY21 is likely to be public utility services including electricity supply, gas and water supply at 2.7%.

· In terms of negative construct, the sharpest fall is expected in trade, hotels and transport at -21.4%, which was expected being the worst hit by the pandemic.

· The construction sector is expected to fall by -12.6% while mining and quarrying is also expected to fall by -12.4% in the fiscal year 2020-21.

· Above all, the key manufacturing sector is likely to contract by -9.4%. That is not great news considering its strong externalities for the service sector.

· Year 2021 could see contraction in per capita GDP by nearly -8.7%. This has already been one of the reasons why most rating agencies are not upgrading Indian ratings.

The moral of the story appears to be that there are strong hopes of further recovery. For a market that is largely driven by hope, that is good news.