The country’s economic growth is expected to contract 8 per cent in the current fiscal and fiscal deficit is likely to be at 7.4 per cent of GDP (gross domestic product) for 2020-21, according to the latest round of Ficci’s Economic Outlook Survey.

However, the survey projected that the economy, due to low base and on the successful roll out of vaccines, could expand 9.6 per cent in the financial year 2021-22.

The forecast seems to indicate that the contraction this fiscal would be more than the contraction of 7.7 per cent projected by the first advanced estimates of the national income.

The economy had grown 4.2 per cent in 2019-20.

The annual median growth forecast is based on responses from leading economists representing industry, banking and financial services sector. The survey was conducted in January.

The median growth forecast for agriculture and allied activities has been pegged at 3.5 per cent for 2020-21. “Agriculture sector has exhibited significant resilience in the face of the pandemic.

Higher rabi acreage, good monsoons, higher reservoir levels and strong growth in tractor sales indicate continued buoyancy in the sector,” Ficci stated on the survey findings.

However, industry and services sector, which were most severely hit due to the pandemic , are expected to contract 10 per cent and 9.2 per cent respectively .

The industrial recovery is gaining traction, but the growth is still not broad based. The consumption activity did spur during the festive season as a result of pent-up demand built during the lockdown but sustaining it is important going ahead, the survey said.

Besides, it observed that some of the contact intensive service sectors like tourism, hospitality, entertainment, education, and health sector are yet to see normalcy.

“The quarterly median forecasts indicate GDP growth to contract by 1.3 per cent in the third quarter of 2020-21. The growth is expected to be in the positive terrain by the fourth quarter with a projection of 0.5 per cent growth,” estimates the survey.

The Ficci report said on the fiscal front, a slippage is imminent this year and the median estimate for fiscal deficit to GDP ratio was put at 7.4 per cent for 2020-21 by the participants with a minimum and maximum range of 7 per cent and 8.5 per cent, respectively. Fiscal deficit for 2020-21 was budgeted at 3.5 per cent.
However, participants of the survey expect the economy to perform much better and have projected a median GDP growth rate of 9.6 per cent for 2021-22.