Page 415 - ES 2020-21_Volume-1-2 [28-01-21]

42 Economic Survey 2020-21 Volume 2

V-SHAPED ECONOMIC RECOVERY

1.50 India’s GDP contraction of 23.9 per cent in Q1: FY 2020-21 and 7.5 per cent in Q2: FY
2020-21 quarter reflect the unparalleled effect of the Covid-19 pandemic and the containment
measures that were taken to control the pandemic. The contraction was consistent with the
India’s enforcement of one of the most stringent lockdowns as reflected in the Government
Response Stringency Index measured by Oxford University. The fundamentals of the economy
remained strong as gradual scaling back of lockdowns, along with the astute support of
Atmanirbhar Bharat Mission has placed the economy firmly on the path of recovery.

1.51 NSO has estimated a contraction of real GDP by 7.7 per cent in 2020-21 as compared to a
growth of 4.2 per cent in 2019-20. This is the fourth contraction in India's GDP since 1960-61
(Figure 39). The contraction in 1965-66 and 1971-72 coincided with wars and droughts while
the year 1979-80 was associated with a severe drought and political instability. A common factor
in all these years was a steep fall in agricultural output. The year 2020-21, on the contrary,
has been bestowed with abundant monsoons leading to the agricultural sector emerging as the
silver lining of the economy. The contraction this year reflects the ‘once in a century crisis’

unleashed by the pandemic and associated public health measures.
Figure 39: Trend in India’s Real GDP Growth

Source: NSO

1.52 Government Consumption and Net Exports have cushioned the contraction in GDP
while Gross Capital Formation (GCF) and Private Consumption have contributed to the
contraction in GDP in 2020-21 (Figure 40). Government final consumption expenditure has
sustained the growth of GDP in 2020-21 with its share increasing to 14.0 per cent from 12.0
per cent in 2019-20 (Figure 41). The share of private consumption has almost remained the
same indicating the adverse impact of the pandemic and restrained personal consumption in
contact-sensitive sectors. Gross Investment has contributed most to the contraction in GDP

in 2020-21 with its share in GDP pegged at 26.7 per cent, lowest in the 2000s. Net Exports