India’s GDP Contracts by 7.5 Per Cent, Country in Technical Recession For The First Time
India’s Gross Domestic Product (GDP) contracted by 7.5 per cent for July-September quarter (Q2) after an unexpected decline of 23.9 per cent in the April-June quarter. The Ministry of Statistics and Programme Implementation (MoSPI) released provisional estimates on Friday. On a related note, in the corresponding quarter of 2019-20, GDP expanded by 5.2 per cent.
As a result, for the first time in the history of India, the country’s economy entered into a technical recession. For the unversed, when the growth rate of GDP goes negative for two consecutive quarters or more, it is called recession.
The worst contraction in the history of Indian economy happened during the April-June quarter. The GDP contracted by 23.9 per cent due to nationwide lockdown in the wake of pandemic. Now, as the government has eased several restrictions across the nation, the economy is gradually coming back on the track. Cautioning about the “sustainability of demand”, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Thursday the economy showed stronger-than-expected pick-up in the momentum of recovery.
Interestingly, RBI said that GDP for Q2 was set for 8.6 per cent of contraction. However, it emphasised that the economy would exhibit a positive growth in the October-December quarter of 2020-21.
As per MoSPI data, manufacturing industry saw a rise of 0.6 per cent in the Q2. Similarly, the electricity, gas, water supply and other such utility services also saw a growth of 4.4 per cent. Agriculture, forestry and fishing industry witnessed a growth at a constant pace of 3.4 per cent. At the same time, trade, hotels, transport, communication and broadcasting services contracted by 15.6 per cent in September quarter. The construction industry also contracted by 8.6 per cent.
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