India Officially Enters Technical Recession As GDP Contracts By 7.5 Percent
By FnF Correspondent | PUBLISHED: 28, Nov 2020, 18:59 pm IST | UPDATED: 30, Nov 2020, 15:41 pm IST
Delhi: India’s Gross Domestic Product (GDP) has contracted 7.5% in the second quarter, July-September period as compared to the same period last year. According to data released by the National Statistical Office on Friday although there are signs of economic recovery since the lockdown, with two consecutive quarters of negative growth, India has for the first time since independence officially entered a technical recession.
The economy of India had slumped about 24 percent from April to June due to a strict lockdown imposed to contain the spread of Covid-19 disease. Compared to the first quarter data shows that the economy has rebounded as lockdown restrictions were removed and there is now sustained growth in manufacturing, power generation, and farm output. Manufacturing especially showed a 0.6 percent growth in July-September after it had shrunk by a massive 39 percent in the preceding quarter. The contraction is also lesser than the 8.6 percent that the analysts had estimated.
This shows a sharp economic recovery from May/June 2020 as industries opened up. It is expected that the recovery will continue in quarter 3 as the government lifts further restrictions. Earlier this month on November 11, the Reserve Bank of India (RBI) had said that if this upward trend in the economy is sustained, the Indian economy will return to growth in the October-December quarter.
Assocham Secretary General Deepak Sood said in a report by PTI, "Earlier estimates had apprehended around 10 percent drop in Q2. The slide has been narrowed to 7.5 percent, a situation much better than expected. Going forward, the second half of the current financial year should give us surprises on the positive side."
The Reserve Bank of India (RBI) has estimated that the economy will contract by 9.5% for the full fiscal year. China's economy grew by 4.9 percent in July-September this year, faster than the 3.2 percent growth in April-June 2020.