Biggest ever decline in GDP in 24 years
1. As per the latest data released, what the actual scenario on GDP front ?
The Indian economy has recorded the biggest decline in 24 years in the first quarter of FY 2020-21. According to the government data released on 31 Aug , the country’s economy declined by 23.9 percent in the April-June quarter.
The Ministry of Statistics and Program Implementation said in a statement, ‘GDP in the first quarter of 2020-21 is estimated at Rs 26.9 lakh crore as against Rs 35.35 lakh crore in the first quarter of 2019-20. We can see a decline of 23.9 percent.
The government is making efforts to get the economy back on track but there is still a state of uncertainty prevailing due to the Corona epidemic.
2. What is the major cause of such a steep fall in GDP figures in the first quarter of FY 2020-21 ?
The fiscal deficit of the central government has crossed the budget estimate for the entire year in the first four months (April-July) of the financial year due to weak revenue collection. According to the data released by the Comptroller and Auditor General (CGA), the fiscal deficit for the current financial year from April to July reached 103.1 per cent, or Rs 8,21,349 crore, as compared to its annual estimate.
It was 77.8 percent of the annual budget estimate during the same four months a year ago. A government’s fiscal deficit is the difference between its total spending and revenue. It surpassed the annual target in October last year.In the Budget 2020-2021 presented by Finance Minister Nirmala Sitharaman, the fiscal deficit is estimated to be Rs 7.96 lakh crore i.e. 3.5 percent of the gross domestic product (GDP).These figures had to be revised in view of the situation arising from the outbreak of the corona virus epidemic. The lockdown ,clamped due to the Corona virus ,caused considerable disruption in economic activity.
Topic :-Biggest ever decline in GDP
Author:-Ensemble IAS Academy
Category:- Indian Economy
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