GDP growth for FY20 revised downwards to 4% from 4.2%

NEW DELHI: India’s economy expanded at a much slower rate than initially estimated in 2019-20, according to revised numbers released by the government, reinforcing views that economic growth had already moderated before the Covid-19 pandemic.

The statistics office on Friday revised the growth rate for India’s gross domestic product (GDP) for fiscal 2020 to 4% from 4.2% earlier. However, the growth estimate for FY19, was raised to 6.5% from 6.1%. As per the estimates, the savings rate rose in the last two years.

Gross savings as a percentage of gross national disposable income for 2019-20 is estimated at 30.9% against the revised estimate of 30.1% for 2018-19. The earlier gross savings was at 29.7% for FY19, the lowest since 2010-11 new base data.


For national accounts, the statistics office releases the first advance estimates for a financial year on January 7 before the Budget, followed by a second advance estimate in late February. The provisional estimate, which is released in end-May, is then first revised in January-end of the subsequent financial year. Provisional estimates for 2019-20 were released in May 2020.

The gross value added (GVA) grew 4.1% in 2019-20, driven by higher growth in agriculture and allied activities; trade, hotels, transport; and financial, real estate and professional services. It was previously estimated at 3.9%.

The revised data showed that gross fixed capital formation (GFCF)- an indicator of investment- expanded by 5.4% in FY20 in contrast to the earlier estimate of a 2.8% contraction.

“The rates of capital formation in the years 2011-12 to 2019-20 have been higher than the rate of saving because of positive net capital flow from RoW,” the Ministry of Statistics & Programme Implementation said in a statement.

However, gross capital formation-to-GDP ratio fell to 32.2% for FY20 against the revised estimate of 32.7% in FY19.

The per capita net national income (current prices) is estimated at Rs 1.25 lakh in FY19, a tad lower than the previous estimate of Rs 1.26 lakh while that in FY20 is unchanged at Rs 1.34 lakh, according to the data.

Private consumption grew 5.5% in FY20, higher than 5.3% in the earlier estimate while that in FY19 was revised upwards to 7.7% from 7.2% earlier.

“We are apprehensive that without widespread and sustained reforms, the potential growth of the Indian economy may be restricted to 5-5.5% over the medium term, once the Covid related shock (FY21) and subsequent rebound (FY22 and FY23) are behind us,” said Aditi Nayar, principal economist at ICRA.

Nominal GDP, or GDP at current prices, has been revised to 7.8% from the provisional estimate of 7.2% for FY20.