India's economy is likely to rebound with a 11 per cent growth in the next financial year as it makes a “V-shaped” recovery after witnessing a pandemic-led carnage, the Pre-Budget Economic Survey said on Friday.

The Gross Domestic Product (GDP) is projected to contract by a record 7.7 per cent in the current fiscal ending March 31, 2021.

India witnessed its last annual contraction of 5.2 per cent in fiscal year 1979-80.

The Economic Survey 2020-21 said the agriculture sector is the only silver lining while services, manufacturing and construction were most hit by the lockdown that was imposed to curb the outbreak of the COVID-19 pandemic.

"After an estimated 7.7 per cent pandemic-driven contraction in 2020-21, India's real GDP is projected to record a growth of 11.0 per cent in 2021-22 and nominal GDP by 15.4 per cent. These conservative estimates reflect upside potential that can manifest due to the continued normalisation in economic activities as the rollout of COVID-19 vaccines gathers traction," the survey said.

The growth will further be supported by supply-side push from reforms and easing of regulations, push for infrastructural investments, boost to manufacturing sector through the Productivity Linked Incentive Schemes, recovery of pent-up demand for services sector, increase in discretionary consumption subsequent to roll-out of the vaccine and pick up in credit given adequate liquidity and low interest rates, it said.

The survey tabled in Parliament by Finance Minister Nirmala Sitharaman said there is likely to be a fiscal slippage during the year based on the available trends for April to November 2020.

The document also said despite the hard-hitting economic shock created by the global pandemic, India is witnessing a V-shaped recovery with a stable macroeconomic situation aided by a stable currency, comfortable current account, burgeoning forex reserves, and encouraging signs in the manufacturing sector output.

"India is reaping the 'lockdown dividend' from the brave, preventive measures adopted at the onset of the pandemic...," it said in the opening chapter titled 'Saving Lives and Livelihoods Amidst a Once-in-a-Century Crisis'.

Unlike Oscar Wilde's cynic, 'who knows the price of everything and the value of nothing,' India's policy response to the pandemic stemmed fundamentally from the humane principle advocated eloquently in the Mahabharata that 'Saving a life that is in jeopardy is the origin of dharma.'

India is expected to witness current account surplus during the current financial year after a gap of 17 years, the survey said. India has recorded a current account surplus of 3.1 per cent of GDP in the first half of the year largely supported by strong services exports.

"Given the trend in imports of both goods and services, it is expected that India will end with an annual current account surplus of at least 2 per cent of GDP after a period of 17 years," it said.

The contraction of 7.7 per cent in the current fiscal is on account of disruption in normal activities due to the pandemic. However, India is expected to be the fastest growing economy in the next two years, the survey said.

Earlier in the week, the International Monetary Fund projected an impressive 11.5 per cent growth rate for India in 2021, making the country the only major economy of the world to register a double-digit growth this year amid the pandemic.

As per the advanced estimates of national income released by the National Statistical Office (NSO), India's GDP is estimated to contract by a record 7.7 per cent during 2020-21 as the COVID-19 pandemic severely hit the key manufacturing and services segments.

Other global agencies too have projected contraction in the country's economic growth for the fiscal 2020-21.