RBI survey axes India's GDP growth by 1.5% in 2020-21

As India's economy is facing a massive slowdown due to the coronavirus pandemic, a survey by the Reserve Bank of India (RBI) has said that the Gross Domestic Product (GDP) may decline by 1.5 per cent in FY21.

The survey, however, added that the growth is likely to be better in the next fiscal.

"Real gross domestic product (GDP) is likely to contract by 1.5 per cent in 2020-21 but is expected to revert to growth terrain next year when it is likely to grow by 7.2 per cent," said the Survey of Professional Forecasters (SPF) sponsored by the RBI.

It further said that real gross fixed capital formation (GFCF) is likely to register negative growth of 6.4 per cent in 2020-21 but is expected to grow by 5.6 per cent in 2021-22.

The SPF survey was based on the response of 24 panellists, who predicted that real gross value added (GVA) is expected to decline by 1.7 per cent this fiscal but uptick in industrial and services sector activities will help it to record 6.8 per cent growth in 2021-22.

Real private final consumption expenditure (PFCE) is also expected to decline by 0.5 per cent during 2020-21 but likely to record 6.9 per cent growth during 2021-22, the survey said.

Headline consumer price index (CPI) inflation is expected at 5.6 per cent in Q1:2020-21, but moderate thereafter to 2.8 per cent by the fourth quarter of 2020-21, the study said

“CPI inflation excluding food and beverages, pan, tobacco and intoxicants and fuel and light is expected at 3.8 per cent in Q1:2020-21 and moderate gradually to 3.1 per cent by Q4:2020-21,” it added.

In another survey, RBI has shown that consumer confidence has collapsed to a historic low in May.

"Consumer confidence collapsed in May 2020, with the Current Situation Index (CSI) touching historic low and the one year ahead Future Expectations Index (FEI) also recording a sharp fall, entering the zone of pessimism," said RBI's Consumer Confidence Survey (CCS).

The survey added that consumer perception on the general economic situation, employment scenario and household income plunged deeper into contraction zone, while expectations on general economic situation and employment scenario for the year ahead were also pessimistic.