India's finance minister Nirmala Sitharaman. Picture: T NARAYAN/BLOOMBERG
GDP will shrink 7.7% in the financial year ending March 2021, the statistics ministry said in its first advance estimate published on Thursday. That is steeper than a 7.5% drop forecast by the Reserve Bank of India, as well as economists surveyed by Bloomberg. The rupee declined 0.3% at close in Mumbai on Thursday before the data was published, while sovereign bonds were little changed.
But unlike the Southeast Asian economy, which is expected to extend the decline for a second straight year in 2021, economists forecast India to bounce back strongly in the next financial year starting April 1, helped by a string of fiscal and monetary steps. For now, the country is in a recession after two straight quarters of contraction in GDP.