For the financial year 2020-21, GDP growth was at -7.3% as compared to 4 percent in 2019-20, stated government data. Meanwhile, India's economy grew by 1.6 per cent in the fourth quarter of 2020-21, according to data released by the National Statistical Office (NSO).
Commenting on this, Alok Sheel, RBI Chair Professor in Macroeconomics at ICRIER - Indian Council for Research in International Economic Relations (ICRIER) said, "The provisional estimate of 2020-21 GDP numbers are slightly better than what were expected, but are unlikely to change the big picture. These numbers would need to be counter-balanced by likely downgrades of current GDP growth estimates for 2021-22. The consensus number for this is now down to below 10% on account of the severity of the second wave of Covid 19."
He added further it may be recalled that the IMF projection was 12.5 per cent in its WEO of April 2021. "Thus the overall rebound of the economy through to 2021-22 is likely to be lower, and the output loss greater, than what can be estimated from the WEO April 2021 numbers. In view of this, despite CPI being on the higher side the RBI is unlikely to raise interest rates any time soon, even though the current monetary policy regime primarily targets inflation. Also, greater fiscal support might be required to stabilise growth."
According to recent all-India Consumer Price Index for Industrial Workers (CPI-IW) for April, 2021, it increased to 120.1 points compared to 119.6 points for March, 2021. Meanwhile, the country’s retail inflation, measured by the Consumer Price Index (CPI), eased to 4.29 per cent in the month of April.
Radhika Rao, Economist at DBS Group Research, said, "Trend for the first quarter of 2021, whilst encouraging, is backward looking, in light of the resurgence in the pandemic from March to early May."
Rao added cases have tapered off in recent weeks, however, in contrast to last year, the unlocking process won’t be linear, as states exercise more discretion, making the unwinding in restrictions more staggered and less predictable. "Whilst awaiting a vaccination pivot, normalisation in activity is likely to be more gradual, and more evident in sequential terms as base effects prop annual comparisons. We maintain our FY22 growth projection at 9.5 per cent y/y from a revised -7.3% in FY21."
