With economic activities coming to a halt amid the Covid-19 pandemic and the lockdown, the Indian economy is expected to record a negative 4.5 per cent growth rate in the current financial year, according to the FICCI’s Economic Outlook Survey.

The minimum and maximum growth estimate stood at (-) 6.4 per cent and 1.5 per cent, respectively, for FY21, it said. The quarterly median forecasts indicated 14.2 per cent contraction in the gross domestic product (GDP) in the first quarter of FY21, it added.

The signs of an impending slowdown have been sharply accentuated by the Covid-19 pandemic-induced lockdown. The Covid-19 pandemic has severely hit global as well as domestic growth.

The current round of survey, conducted in June, drew responses from leading economists representing industry, banking and financial services sectors.

Economic activity-wise annual forecast indicated a median growth of 2.7 per cent for agriculture and allied activities for FY21. Agriculture seems to be the only sector with a silver lining.

There’s an apparent upside as far as performance of monsoon was concerned this year with enough water in reservoirs, it said.

The rural sector, supported by a steady agriculture performance and hopefully a limited number of Covid-19 cases, will be a key demand generator this year, as per the survey.

Further, the direct income support through the PM-KISAN and increased allocation to MGNREGA were helping the returnee migrants, lending support to the rural economy, it showed.

The industry and services sectors are expected to contract by 11.4 per cent and 2.8 per cent, respectively. “Weak demand and subdued capacity utilisation were manifesting into a drag on investment, and the pandemic has further extended the timeline for recovery,” it said.

Even though activity in some sectors, like consumer durables and FMCG (fast-moving consumer goods), is gaining traction, most companies are still operating at low capacity utilisation rates. Labour availability and feeble demand remain major issues.

Therefore, fresh investments would be difficult to come by in the near-to-medium term, the survey predicted.

Absence of demand stimulus, a second wave of the pandemic and continuation of social distancing and quarantine measures would

weigh heavily on growth prospects, it said.

“With demand and investment outlook muted, robust government expenditure has been the only saviour. Nonetheless, growth is likely to bottom out after the second quarter of FY21,” FICCI survey said.