NCAER sees GDP shrinking by 12.6% in FY21, falling in three remaining qtrs

The fact is that economic hysteresis, the medium to long-term footprint of a major economic shock, is indeed very long, the think tank said.
The National Council of Applied Economic Research (NCAER) has projected the economy to contract 12.6 per cent in the current financial year (FY21), with the remaining three quarters expected to witness a fall in  gross domestic product (GDP).

 

It pegged the GDP fall at 12.7 per cent in the second quarter, 8.6 per cent in the third quarter and 6.2 per cent in the fourth quarter. GDP declined a record 23.9 per cent in the first quarter.

 

NCAER said the key question was how the economy would perform after that. “References to V-shaped recovery obfuscate more than they reveal," it said.

 

The fact is that economic hysteresis, the medium to long-term footprint of a major economic shock, is indeed very long, the think tank said.

 

After 2020-21, annual growth of 7 per cent would imply a growth swing of 20 per cent not seen so far in India.

 

“Assuming optimistically that 7 per cent growth is indeed achieved because of the base effect of a steep decline in 2020-21, combined with strong policy measures to revive growth, we would still reach the previous peak output level of 2019-20 only by the end of 2022-23.

 


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