COVID-19 Impact: Economy Will Contract 4.5% in 2020, Says Govt

The government report has said that it is due to “unprecedented COVID-19-induced supply-demand shocks.”

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(Photo: iStock / Altered by Kamran Akhter / The Quint)

In line with the world economy shrinking due to coronavirus pandemic, India, too, will register a gross domestic product (GDP) contraction of 4.5% in the fiscal year 2020-21, a government report has revealed.

The report has said that it is due to "unprecedented COVID-19-induced supply-demand shocks," NDTV reported.

“Given the immense uncertainty associated with infection and macroeconomic recession curves of countries across the world, IMF (International Monetary fund), in its World Economic Outlook (June 2020) report, has downward revised global growth to (–) 4.9 percent in 2020, 1.9 percentage points lower than its April 2020 forecast.”

Department of Economic Affairs (DEA)

The macroeconomic report also stated that economic growth of pre-COVID times, as and when restored through fuller unlocking of the economy, will heavily lean on the reforms undertaken today to enhance its potential tomorrow.

"All regions across the world are projected to experience negative growth in 2020, the first time in history. While advanced economies are projected to contract by 8 percent in 2020, 1.9 percentage points lower than the April forecast, growth in emerging market and developing economies has been forecast at -3.0 percent, a downward revision of 2 percentage points," it added.

Economic slowdown in the country has also led to a shortfall in revenue collection during the first two months of the fiscal year 2020-21. In May, fiscal deficit stood at Rs 4.7 lakh crore but revenue receipts registered a negative growth of 68.9 percent as per the report.

In addition, the net tax receipts for 2019-20 was reportedly 9.9 percent lower than expected.

The government has further said, "The commitment of the government towards both structural reforms and supportive social welfare measures will help build on these ‘green shoots’. The resolve for ‘Atmanirbhar Bharat’ will be strengthened with the collective effort of all stakeholders and contribute to rebuilding a strong vibrant Indian economy."

(With inputs from NDTV)