The economy was pushed into a record contraction in the June quarter due to COVID-19 restrictions.
India’s gross domestic product (GDP) is expected to have declined in the July-September period, but at a softer pace compared to the previous quarter, as business and economic activities rebound after months of slowdown caused by the coronavirus. Official data at 5:30 pm today is likely to show that the economy entered its first technical recession, which is two consecutive quarters of GDP contraction, since 1996, when the country began to record quarterly records. Still, economists are optimistic that the decline in the second quarter of the current financial year will not be as severe as the record 23.9 percent decline in the April-June period.
Here are 10 things to know about the country’s GDP:
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Economists expect the country’s GDP to contract 8.8 percent in the quarter ending Sept. 30, according to a poll by the Reuters news agency. They also predict a 3 percent contraction in the December quarter, followed by a 0.5 percent expansion in the last period from January to March of the 2020-21 financial year. (Also read: At -23.9%, GDP contracts at its fastest recorded rate)
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Still, the economy is on track to post an overall 8.7% contraction for the full year, which, if true, would be its worst performance in more than four decades. Meanwhile, restrictions related to COVID-19 have resulted in the loss of thousands of jobs and forced the majority of the workforce to remain indoors, a major blow to an already slowing economy.
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The economy is expected to rebound early next year in hopes of better consumer demand fueled by progress in coronavirus vaccines, say economists, who have marginally raised forecasts following a rebound in demand. of automobiles, nondurable goods and rail transportation during festival season.
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There has been a drop in daily coronavirus cases in the country, which have dropped to half from their peak of more than 97,000 infections a day in mid-September. COVID-19 infections in India have exceeded 9.27 million, making it the second most affected country in the world after the United States.
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As some states reimposed restrictions this week to combat a second wave of infections, companies feared the restrictions could slow the pace of recovery in the next two to three months, as well as increase the risk of inflation.
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Many economists expect the economy to return to expansion mode as early as the December quarter, as the recovery continues. Optimism about a rebound in the economy is supported by improving car sales and service sector performance, as the country continues to phase out restrictions to curb infections.
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The economy was pushed into a record contraction in the June quarter, following months of low demand and business activity long before the COVID-19 outbreak.
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Recently, the government announced additional stimulus measures as part of its Atmanirbhar Bharat series of announcements. Under Atmanirbhar Bharat 3.0, Finance Minister Nirmala Sitharaman listed measures worth Rs 2.65 lakh crore with a focus on job creation and sectors such as real estate, bringing full monetary and fiscal aid in the country’s battle against COVID-19 at Rs 29.88 lakh crore or 15 percent of its GDP.
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On Thursday, RBI Governor Shaktikanta Das highlighted a stronger-than-expected recovery from the coronavirus-led lockdown, hinting at continued support for monetary policy to revive the economy. The RBI chief’s comments in his speech at an event come days before the scheduled bi-monthly review of central bank policy.
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The RBI has been doing the heavy lifting to provide stimulus to the economy, having cut key benchmark rates by a total of 115 basis points (1.15 percentage points) so far this calendar year. The central bank has infused liquidity and transferred cillions of rupees in dividends to the government, despite inflation remaining well beyond its comfort level of 2 to 6 percent.
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