India’s economy is likely to contract 10 percent or Rs 20 lakh crore in the ongoing fiscal, the first contraction in over 40 years, due to COVID lockdown, said Former finance secretary Subhash Chandra Garg.
Besides, Garg said that the centre’s Rs 21 lakh crore economic stimulus package is actually of only Rs 1.4-1.5 lakh crore or about 0.7 percent of the country’s gross domestic product (GDP).
“It is certain that India’s GDP will contract after 40 years in 2020-21,” he said in a blogpost, adding that “it also appears fairly certain that this would be a very large contraction of about 10 per cent of GDP or loss of about Rs 20 lakh crore of income”.
The former finance secretary also said that 2020-21 fiscal will be mentioned in the history of India as the year when the country got diverted from its story of three decadal outstanding growth. Indicating that India was not in the good economic health in 2019-20, he said, the economy grew just by 4 percent for the year which happens to be the lowest growth rate in last 11 years.
Lately, rating agencies Fitch and Crisil have slashed India’s economic growth forecast for the current fiscal year due to a prolonged lockdown.