The economy is officially expected to contract 7.7 per cent in the current fiscal — the worst performance since Independence — paving the way for a range of measures to boost growth in the forthcoming budget.

The estimate released on Thursday by the Central Statistics Office shows contraction to be more than the RBI’s projection of 7.5 per cent but much less than the World Bank’s forecast of 9.6 per cent contraction for the fiscal and the IMF’s forecast of 10.3 per cent contraction. The IMF will review its forecast on January 26.

The economy had grown 4.2 per cent in 2019-20 but entered a recessionary phase with two successive quarters of sharp contraction — 23.9 per cent in the first quarter and 7.5 per cent in the second quarter — triggered by the coronavirus-induced nationwide lockdown from March.

The statistics ministry said GVA or “gross value added”, which strips out indirect taxes and subsidies, is expected to contract 7.2 per cent.

“Real GVA at basic prices is estimated at Rs 123.39 lakh crore in 2020-21 against Rs 133.01 lakh crore in 2019-20, showing a contraction of 7.2 per cent,” the CSO press release said.

“The growth in nominal GDP during 2020-21 is estimated at -4.2 per cent,” it added.

The release said the numbers must be read with caution as the data has been extrapolated for various sectors over different time periods of seven to eight months, and they could be revised later.

The finance ministry said the GDP estimates suggested a continued resurgence in economic activity in the second half of the current fiscal and pointed at a post lockdown sustained V-shaped recovery.

Arun Kumar, Malcolm S Adiseshiah Chair Professor at the Institute of Social Sciences, said: “The numbers do not reflect the reality as slowing economic growth was further pulled down by the Covid-19 pandemic. The high frequency numbers do not give the complete picture of the economic scenario and the estimates do not take the effect on the unorganised sector.”

“Our expectation is that the Indian economy will contract 7.8 per cent in 2020-21 in real terms, with the recession ending in the current quarter with a mild YoY (year-on-year) growth. We expect the nominal GDP to contract by 4.5 per cent in 2020-21,” Aditi Nayar, the principal economist of Icra, said.

Sector wise, manufacturing is expected to see a contraction 9.4 per cent against a growth of 0.03 per cent in the year-ago period, while the agriculture sector is estimated to grow at 3.4 per cent in 2020-21 versus 4 per cent in 2019-20.

Mining and quarrying and trade, hotels, transport, communication and services related to broadcasting sectors are expected to see a massive contraction of 12.4 per cent and 21.4 per cent, respectively, versus a growth of 3.1 per cent and 3.6 per cent in the year ago period.

Among the other sectors, electricity is likely to grow at 2.7 per cent versus 4.1 per cent in the last fiscal, while financial services and public services are estimated to contract 0.8 per cent and 3.7 per cent, respectively.