The latest round of FICCI's Economic Outlook Survey puts forth an annual median GDP growth forecast for 2020-21 at (-) 8.0%. The median growth forecast for agriculture and allied activities has been put at 3.5% for 2020-21. Agriculture sector has exhibited significant resilience in the face of the pandemic. Higher rabi acreage, good monsoons, higher reservoir levels and strong growth in tractor sales indicate continued buoyancy in the sector.

However, industry and services sector, which were most severely hit due to the pandemic induced economic fallout, are expected to contract by (-) 10.0% and (-) 9.2% respectively during 2020-21. The industrial recovery is gaining traction, but the growth is still not broad based. The consumption activity did spur during the festive season as a result of pent-up demand built during the lockdown but sustaining it is important going ahead. Also, some of the contact intensive service sectors like tourism, hospitality, entertainment, education, and health sector are yet to see normalcy.

The quarterly median forecasts indicate GDP growth to contract by (-) 1.3% in the third quarter of 2020-21. The growth is expected to be in the positive terrain by the fourth quarter with a projection of 0.5% growth. The present round of FICCI's Economic Outlook Survey was conducted in the month of January 2021 and drew responses from leading economists representing industry, banking and financial services sector.

Further, on the estimates of other macro parameters, the participants put the median growth forecast for IIP at (-) 10.7% for the year 2020-21, with a minimum and maximum range of (-) 12.5% and (-) 9.5% respectively. WPI based inflation rate is projected to be flat in 2020-21. On the other hand, CPI based inflation has a median forecast of 6.5% for 2020-21, with a minimum and maximum range of 5.8% and 6.6% respectively. The latest retail inflation numbers do report some softening on back of a fall in prices of food items, especially vegetables.

On the fiscal front, a slippage is imminent this year and the median estimate for fiscal deficit to GDP ratio was put at 7.4% for 2020-21 by the participants - with a minimum and maximum range of 7.0% and 8.5% respectively. Fiscal deficit for 2020-21 was budgeted at 3.5%.

The year 2020 has been unprecedented with COVID-19 pandemic leaving a deep trail of destruction on the health and economic front. Participants of the survey expect the economy to perform much better and have projected a median GDP growth rate of 9.6% for the financial year 2021-22. The strong rebound in growth will be supported by a favorable base as economic activity normalizes post the sharp pandemic led contraction. The minimum and maximum growth estimate was forecasted at 7.5% and 12.5% respectively.

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. It is therefore important that preventive measures continue to be in place. A good vaccine coverage without many cases of adverse reporting will be a pre-requisite for the normalization process.

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