India GDP data: Key things to watch out for in FY21 GDP estimates to be released today


The Centre is set to declare the GDP estimates for the last quarter (January- March) of 2020-21 and the yearly economic growth data for FY21 later in the day offering an assessment of the true impact of the COVID-19 pandemic.

India’s economy had shrunk by a massive 24.4 percent in the April-June quarter of the year due to COVID-19 pandemic induced lockdown which had brought the entire economic machinery to a near grinding halt. GDP contraction slowed to a less severe 7.3 percent during the second quarter and had returned to growth in the third quarter (October – December) posting a growth of 0.4 percent.

Expectations of recovery for the fourth quarter have been floated by several estimates but India’s full-year economic data is expected to register contraction. The Reserve Bank of India and the Ministry of Statistics and Programme Implementation (MOSPI) both expect GDP for the full year to contract by 8 per cent, and most analyst estimates are in the 7-8 per cent contraction rate.

It will be the first yearly economic contraction since 1980-81, and the largest ever since at least 1952.

Ratings agency ICRA has forecasted a 2 percent growth in the fourth quarter and a 7.3 percent contraction for the fiscal year while SBI’s Ecowrap has pegged the fourth quarter growth at 1.3 percent and a 7.3 percent contraction for FY21.

India’s GDP had shown a growth of 4 per cent in 2019-20, compared to 6.1 per cent in 2018-19, indicating that a slowdown was well underway even before the COVID-19 pandemic.

Here are the key indicators to watch out for in the GDP data :


Agriculture has been the only bright sector in the economy in the previous three quarters, registering a rise of 3.3 per cent in the lockdown hit first quarter, 3 per cent in the second quarter and 3.9 percent rise in the third quarter of 2020-21, even as other sectors were showing contraction. In a way, India’s agriculture sector saved the economy last fiscal. Growth in agriculture is expected in the fourth quarter but will it be able to balance the damage suffered by the others sectors which have yet again started to fall with the onset of the second wave of the covid pandemic.


Private Final Consumption Expenditure which reflects households spending contracted 2.3 percent in the third quarter despite the pent up and festival demand. Household spending had reported a much narrower deceleration in the October-December quarter from the 11.3 percent contraction in the second quarter. India had reported a continued contraction in this sector on the back of massive salary and job cuts that occurred due COVID-19 induced lockdown thus prompting households to put off the purchases and save instead. A comeback in this segment could therefore be expected to be the key to India’s economic growth.


A major pain point for India has been the slow recovery in the manufacturing sector. After posting a contraction of 35.9 percent in the first quarter (April -June), and a contraction 1.5 percent in the second quarter (July-September) when the lock-down restrictions halted production, the sector had rebounded to a growth of 1.6 percent in the quarter ended December with the easing of the restrictions. The manufacturing sector, however, remained weak despite showing a slight recovery in the third quarter. But with the imposition of fresh restrictions by several state governments due to the rise of the fresh cases in the second wave, some of which had started by March (the last month of 2020-21) all eyes will be on this sector to gauge the level of activity in this sector.

Investment and Infrastructure

Investment and infrastructure growth which is reflected by Gross fixed capital formation (GFCF) is vital to kick off the cycle of job creation, demand revival witnessed a growth of 2.6 percent in the third quarter, a turnaround from the 6.7 percent contraction seen in the second quarter (July- September). A pick up in the investment demand is crucial for the economic revival. Investment demand had been slowing for the previous five quarters even before Covid-19 struck India.


Trade, hotel, transport, communication & services related to broadcasting is said to have borne the maximum brunt of the COVID-19 pandemic. Just when the sector had started trotting back to a revival with the easing of restrictions, the onset of the second wave of covid has yet again halted the activity in the sector. The sector reported a much narrower contraction of 15.6 and 7.7 percent in the second and third quarter respectively after a massive contraction of 47.6 percent in April June quarter. To aid the sector in its recovery, the Centre on March 31 had extended the scope of the Rs. 3 lakh crore ECLGS to Hospitality, Travel and Tourism, Leisure, and Sporting sectors.