The pandemic was marginally less severe on the economy in FY21 than initially projected with the annual contraction revised to 6.6% from the 7.3% decline seen earlier, the first revised estimates for the year released on Monday showed. This revision, other things being equal, will depress the current year’s growth to 8.8% from 9.2% projected in the first advance estimate released last month.

The gross domestic product (GDP) growth for FY20 has also been lowered to 3.7% from the 4% estimated earlier. In nominal terms, or GDP at current prices without adjusting for inflation, the economy contracted 1.4% against 3% estimated previously.

“The revisions point to GDP growth for FY22 being 8.8% instead of 9.2%. This makes 8-8.5% for FY23 realisable,” said Madan Sabnavis, chief economist, Bank of Baroda.

Per-capita income, calculated as per-capita net national income, at current prices is estimated at Rs 1.27 lakh in FY21, down from Rs 1.32 lakh in FY20.

Savings and investment rates continued to decline, underlining these long-term structural constraints to growth. As per the estimates, gross savings as a percentage of gross national disposable income for FY21 are estimated at 27.8% against the revised estimate of 29.4% for FY20.

Gross fixed capital formation as a percentage of GDP at current prices dropped to 26.6% in FY21 from 28.6% the year before. At FY12 prices, this measure of investments declined to 27.3% in FY21 from 30.7% in FY20.

As expected, savings of households and private financial corporations increased in FY21 while those of others declined in line with the overall 6.7% fall in gross savings in FY21 from the year before. A portion of these higher household savings have flowed into the stock market.

“Household savings have been overshadowed by the dis-savings of government and corporates. Households savings, which were either forced or precautionary, saw a healthy increase unsurprisingly,” said Yuvika Singhal, economist, QuantEco Research, adding that at a granular level, savings of economic agents moved in different directions.Singhal said that corporates, amidst the nationwide lockdown year, were faced with a combination of demand destruction and supply disruptions, with hit to volume growth impacting their savings adversely.

The gross value added declined 4.8% against the 6.2% contraction estimated earlier.

“The improved performance of three key sectors with a 49% weight in the economy–manufacturing, construction, and financial, real estate and professional services–offset the downward revision in agriculture, mining and quarrying, electricity, trade and public administration, defence and other services,” said Aditi Nayar, chief economist, ICRA.

The statistics office releases the first advance estimates of national income for a financial year on January 7 of that year followed by a second advance estimate at the end of February. The provisional estimate is released at the end of May followed by the first revised estimate at January-end of the subsequent financial year.