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Welcome, Monday, Jun 17, 2024

Indian Economy

The lockdown measures, imposed to contain the spread of Covid-19 pandemic in India, ubiquitously affected employment, business, trade, manufacturing, and services activities. India is likely to record GDP growth of (-) 8 percent during 2020-21 as compared to a growth of 4.0 percent in 2019-20. The contraction was the sharpest in nearly four decades as the Covid-19 induced lockdown hurt the economy of the country very badly. However, India was among the few leading global economies that witnessed positive year-on-year growth in the second half of 2020-21. This contraction in GDP growth is mainly attributed to the contraction in industry and services sector. The GDP growth, however, is expected to rebound strongly in 2021-22 owing to the reform measures undertaken by the Government. The Government announced a special economic and comprehensive package including several structural reforms under Atmanirbhar Bharat of Rs. 20 lakh crore - equivalent to 10 percent of India’s GDP – to fight the Covid-19 pandemic in India.


The performance of the industrial sectors based on the Index of Industrial Production (IIP) comprising mining, manufacturing and electricity registered a growth of (-) 8.6 percent in 2020-21 as compared to (-) 0.8 percent in 2019-20. Mining, manufacturing and electricity sectors in IIP grew at (-) 7.8 percent, (-) 9.8 percent and (-) 0.5 percent respectively during 2020-21 in comparison to 1.6 percent, (-) 1.4 percent and 1.0 percent respectively.


Inflation based on Consumer Price Index-Combined (CPI-C) has moderated from 5.9 percent in 2014-15 to 3.4 percent in 2018-19 and 4.8 percent in 2019-20. It averaged 6.6 percent in 2020-21 (Apr-Dec). Food inflation based on Consumer Food Price Index (CFPI) declined from 6.4 percent in 2014-15 to 0.1 percent in 2018-19 and recorded 6.7 percent in 2019-20. It averaged 9.1 percent in 2020-21 (Apr-Dec). Inflation measured in terms of Wholesale Price Index (WPI) declined from 4.3 percent in 2018-19 to 1.7 percent in 2019-20 and further to (-) 0.1 percent in 2020-21 (Apr-Dec).


In 2020-21, value of India’s exports was US$ 291.10 billion as against US$ 313.36 billion in 2019-20, registering a negative growth of 7.10 percent over the previous year. Non-petroleum and Non Gems & Jewellery exports during 2020-21 were valued at US$ 238.72 billion as compared to US$ 236.17 billion in 2019-20, an increase of 1.08 percent.  Imports for 2020-21 were US$ 393.60 billion as against US$ 474.71 billion, registering a negative growth of 17.09 percent over the previous year. Oil imports during 2020-21 were valued at US$ 82.35 billion, which was 36.92 percent lower than the oil imports of US$ 130.55 billion in the previous year. Non-oil and Non-gold imports during 2020-21 were valued at US$ 272.23 billion, which was 13.83 percent lower than the level of such imports (US$ 315.93 billion) in 2019-20. Thus, the trade deficit for 2020-21 is estimated at US$ 102.50 billion, as compared to US$ 161.35 Billion in 2019-20.


According to the estimates released by Department of Industrial Policy and Promotion (DIPP), the total FDI investments in India during 2020-21 stood at US$ 52.55 billion, as against US$ 42.63 billion in the previous year indicating that government's effort to improve ease of doing business and relaxation in FDI norms is yielding results. Foreign exchange reserves stood at US$ 576.98 billion as on 31st March 2021, as compared to US$ 544.69 billion at end-March 2020.