Growth in H2 will see GDP contract by 7.5% in FY20-21: RBI

The Reserve Bank of India (RBI) on Friday said it expects the economy to record positive growth in the second half of the current financial year.

Illustration: Dominic Xavier/Rediff.com.

The economy contracted by 23.9 per cent in the first quarter and 7.5 per cent in the second quarter on account of the Covid-19 pandemic.

"The second half is expected to show some positive growth," RBI Governor Shaktikanta Das said, adding that during the financial year as whole the economy was likely to contract by 7.5 per cent, which is an improvement over its previous projection of 9.5 per cent contraction.

In October, the RBI had projected the contraction in gross domestic product (GDP) at 9.5 per cent.

Das said the GDP is expected to turn positive in the third quarter and expand at 0.1 per cent. The last quarter is likely to see an expansion of 0.7 per cent.

Hence, the growth in second half of the fiscal is expected to show a positive growth.

In its October monetary policy statement, RBI had said the real GDP growth in 2020-21 is expected to be negative at (-) 9.5 per cent, with risks tilted to the downside (-) 9.8 per cent in Q2 2020-21; (-) 5.6 per cent in Q3; and 0.5 per cent in Q4.