FICCI survey forecasts 8% GDP contraction in FY21

Our Bureau New Delhi | Updated on January 26, 2021 Published on January 26, 2021

Economists called upon the Centre to announce temporary fiscal stimulus to support consumption in the form of income-tax breaks or direct income transfers

India’s GDP at market prices will contract by 8 per cent in the financial year 2021, according to a survey of economists from industry, banking and financial sectors carried out by the Federation of Indian Chambers of Commerce & Industry (FICCI).

Among the three main sectors of the Indian economy, agriculture is the only one which will register growth in the current fiscal year, as signalled by higher rabi acreage, good monsoons, higher reservoir levels and strong growth in tractor sales.

GDP growth at 2011-12 prices

Annual 2020-21

Q3 FY21

Q4 FY21

Growth (in per cent)

Median response

Median response

Median response

GDP at market prices




GVA at basic prices




Agriculture and allied activities












Participating economists of the survey expect the economy to perform much better in the next financial year and have forecast a median GDP growth rate of 9.6 per cent.

However, a surge in the number of Covid-19 cases and the appearance of new strains can be a deterrent to the improving growth conditions. A good vaccine coverage without many cases of adverse reporting will be a pre-requisite for the economic normalisation process, FICCI said in a note.

Manufacturing rebound

While the economists expect agriculture to remain the bright spot, the manufacturing sector is likely to witness a smart rebound in 2021-22, gaining a fillip by the Aatmanirbhar Bharat policy push.

Economists feel that a large part of growth would be supported by massive government spending during the year.

Policy recommendations

A majority of the participating economists were of the view that increased public expenditure on building infrastructure was the need of the hour.

They suggested that the government restructure its expenditure in favour of capital spending (in roads, railways, urban and rural infrastructure as well as housing) along with providing a clear roadmap and financing plans for the National Infrastructure Pipeline.

In addition, the government must chart out credible fiscal maths and a detailed, medium-term fiscal management strategy in the upcoming Budget, the note said.

Furthermore, economists suggested that the government utilise the current buoyancy in market sentiments to its favour by pushing for disinvestments.

The participating economists called upon the Centre to announce temporary fiscal stimulus to support consumption in the form of income-tax breaks or direct income transfers, both of which will ensure more money in the hands of individuals.

To ease the employment situation in both rural and urban areas, the economists called for greater Budget allocations to MGNREGA along with the introduction of a similar urban employment guarantee scheme.

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Published on January 26, 2021
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