New Delhi | Jagran Business Desk: The Union finance ministry on Monday said that India's economy is likely to contract 4.5 per cent in the ongoing financial year 2020-21 due to the nationwide lockdown to contain the spread of coronavirus pandemic. The finance ministry, in its macroeconomic report, said that the uncertainty amid coronavirus pandemic poses a "serious challenge" to the economy in the absence of a vaccine.

Earlier in April, the government had predicted that economic growth may come down by 6.4 percentage points in the current financial year. The report, however, added that the structural reforms and social welfare measures will held build green shoots in the economy.

"Economic growth of pre-COVID times, as and when restored through fuller unlocking of the economy, will heavily lean on the reforms undertaken today to enhance its potential tomorrow," the report said.

The government also said that the lockdown to contain the coronavirus pandemic had a positive impact on exports. Due to the lockdown, there was a sharp decline in imports and low crude oil prices in the global market also had a positive impact on the country's exports

Earlier last month, the IMF had also projected a sharp contraction of 4.5 per cent for the Indian economy in 2020, citing the unprecedented coronavirus pandemic that has nearly stalled all economic activities. The IMF, however, said that the country is expected to bounce back in 2021 with a robust six per cent growth rate.

Posted By: Shashikant Sharma