GDP forecast to contract for 1st time in 41 years

The Indian economy is expected to contract for the first time in nearly 41 years, while the outlook for inflation remains uncertain, Reserve Bank of India’s assessment of the economic situation showed on Friday.

“...GDP growth in 2020-21 is estimated to remain in negative territory, with some pick-up in growth impulses from H2: 2020-21 onward,” said RBI governor Shaktikanta Das.

If the contraction as forecast by RBI and also by other economists is realised, it will be the first contraction for Asia’s third-largest economy since 1979-80, when GDP growth shrank 5.2%. Several investment banks, brokerages and economists have predicted the economic growth to remain flat or contract in the range of 1.5% to 6.8%. IMF’s April estimate, however, showed that India and China will be the only countries to display growth, while the rest will contract

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