In the fourth quarter (January-March) of 2020-21, India’s economy grew by 1.6 percent, restricting the full-year contraction to 7.3 percent, official data showed on Monday. This contraction is the worst performance of Indian economy in the last 40 years.

The growth in the fourth quarter was better than the 0.5 percent expansion in the previous October-December quarter of 2020-21. According to data released by the National Statistical Office (NSO), the gross domestic product (GDP) had expanded by 3 percent in the corresponding January-March period of 2019-20.

Against 4 percent expansion in 2019-20, the Indian economy contracted by 7.3 per cent, in FY 2020-21, showing the economic impact of the Covid-19 pandemic. In its first advance estimates of national accounts released in January this year, the NSO had projected a GDP contraction of 7.7 percent in 2020-21. In its second revised estimates, the NSO had projected a contraction of 8 percent for 2020-21.

On Monday, Chief Economic Adviser KV Subramanian said that the momentum of GDP growth has been affected by the second Covid-19 wave, but assured that its overall economic impact is unlikely to be very large.

Also Read: Issues faced by India in dealing with Covid 19 resurge- Is it too late to contain the Second Wave

Subramanian hoped that the year 2021-22 will be better than 2020-2021. He said that production of food grains is expected to be at record levels in this year and coming year, given the normal monsoon that has been predicted by the Indian Meteorological Department.

On cereals and pulses, he added, “This is reflected both in cereals (rice and wheat) and pulses. The demand in rural India has been resilient.”

Subramanian said that MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) provided significant rural employment in 2020-2021.

It is worthwhile to note that the MGNREGA was criticized by Modi in his first term as a symbol of failure of the UPA regimes. Fate is not without its sense of irony. The same scheme is now providing fall back option for the returning migrant workers in different states across India.

 Also Read: IMF admits that China has overtaken the US as the world’s largest economy

CEA Subramanian also said that eight core industries and index of industrial production, which shows performance by core industries, have shown recovery to pre-pandemic levels during FY21. The output of eight core industries grew 56.1 percent year-on-year (YoY) in April on a low-base effect. This is because industrial production was very low in the year-ago month because of a nationwide lockdown.

It should also be noted that China has recorded a 18.3 percent growth in January-March 2021.