NCAER expects GDP to fall 12.6 pc in 2020-21

The NCAER's May 2020 Quarterly Review of the Economy (QRE) and June 2020 QRE Update had assessed that the economy would contract by 26 per cent in the first quarter of the fiscal. As per the official estimates, the gross domestic product (GDP) during the June 2020 quarter slipped by sharp 23.9 per cent, mainly on account of the lockdown imposed by the government on March 25 to check the spread of coronavirus.

Economic think-tank NCAER expects the economy to decline by 12.6 per cent during the current financial year on account of the impact of the coronavirus pandemic on the business activities. The NCAER's May 2020 Quarterly Review of the Economy (QRE) and June 2020 QRE Update had assessed that the economy would contract by 26 per cent in the first quarter of the fiscal.

As per the official estimates, the gross domestic product (GDP) during the June 2020 quarter slipped by sharp 23.9 per cent, mainly on account of the lockdown imposed by the government on March 25 to check the spread of coronavirus. "We are now forecasting that y-o-y growth will remain negative through Q2, Q3 and Q4 at (-) 12.7 per cent, (-) 8.6 per cent and (-) 6.2 per cent respectively. For the year as a whole, 2020-21 GDP will decline by (-) 12.6 per cent," the National Council for Applied Economic Research (NCAER) said in its quarterly review of the economy.

Going forward, the NCAER review said, "Much will depend on how the spread of the disease plays out, how central and state governments respond to it and how workers and entrepreneurs respond to the disruption. All these factors are major unknowns at this time." Retail inflation has remained elevated at over 6 per cent, above the Reserve Bank of India's target inflation band of 2-6 per cent. Elevated inflation along with the steep contraction of the economy requires macroeconomic policy to navigate its way between two competing goals of reviving the economy and containing inflation, it said.

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