India's Q1FY21 GDP might shrink by 25%, says ICRA

India's Q1FY21 GDP is expected to contract by 25 per cent, ratings agency ICRA said on Tuesday.

ICRA pegged the contraction in Indian GDP and the gross value added (GVA) at basic prices in year-on-year (YoY) terms in Q1 FY2021 at around 25 per cent each.

"The economic performance was primarily weighed down by the considerable drag imposed by three key production sub-sectors, namely manufacturing, construction, and trade, hotels, transport, communication and services related to broadcasting," ICRA said.

"These sub-sectors, which together account for a sizeable 45 per cent of the economy, are assessed to have suffered heavily in volume and profitability terms during the lockdown quarter."

According to ICRA's Principal Economist Aditi Nayar: "ICRA projects the Indian GDP and GVA (at constant 2011-12 prices) to have contracted by about 25 per cent each in Q1 FY2021."

"Our assessment draws from the available data for volumes and profitability for the industrial and services sectors, the expectation of distress in the MSME and the relatively informal sectors, as well as the favourable rabi harvest and government revenue spending."

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