Updated: November 27, 2020 9:00:52 pm
A worker works on the welding line at the Innova Crysta compact multipurpose vehicle (MPV) production line at the Toyota Kirloskar Motor Ltd. plant in Bidadi, Karnataka, India, Wednesday, September 9, 2020 (Photographer: Dhiraj Singh ). / Bloomberg)
India GDP Second Quarter Data: Gross Domestic Product (GDP) of India for the July-September Quarter (Second Quarter) hired by 7.5 percent following an unprecedented 23.9 percent decline in the April-June quarter, according to provisional estimates released by the Ministry of Statistics and Program Implementation (MoSPI) on Friday. GDP had expanded by 5.2 percent in the corresponding quarter of 2019-20.
With this latest development, the Indian economy has entered a technical recession for the first time in history. In economics, when the GDP growth rate is negative for two consecutive quarters or more, it is called a recession.
GDP during the April-June quarter (Q1) had contracted by 23.9 percent, the worst contraction in the history of the Indian economy, due to a strict nationwide lockdown due to the novel coronavirus (COVID-19) for most of the quarter. However, the nation has gradually come out of the lockdown phase and the government has gradually eased various restrictions, and the boiler rooms of the economy have come back to life.
On Thursday, the Governor of the Reserve Bank of India (RBI), Shaktikanta Das, said the economy had exhibited a greater than expected uptick in recovery momentum, but warned of “demand sustainability.” Interestingly, the RBI had ‘now forecast’ that GDP for the July-September quarter was set for a 8.6 percent contraction. However, the RBI said the economy would emerge from the contraction of the past six months and return to positive growth in the October-December 2020-21 quarter.
According to government data, gross value added (GVA) at basic prices at constant prices (2011-12) during the September quarter contracted by 7.0 percent. GVA at basic prices at current prices fell 4.2% in the second quarter of 2020-21.
According to data from MoSPI, the manufacturing industry showed a 0.6 percent rise in the September quarter, after falling a whopping 39.3 percent in the first quarter. Similarly, the electricity, gas, water supply and other utilities segment grew 4.4% in the second quarter, starting from a 7% drop in the previous quarter. Agriculture, forestry and fisheries grew at a steady rate of 3.4 percent in the second quarter, unchanged from the previous quarter.
Among other industries, the contraction in commerce, hotels, transportation, communications and broadcasting-related services was 15.6 percent in the second quarter, much better from a contraction of 47 percent in the first quarter. . The construction sector also showed a contraction of 8.6 percent, better than a contraction of 50.3 percent in the first quarter.
Source: Data from the National Statistics Office (NSO), Ministry of Statistics and Program Implementation (MoSPI)
CEA Subramanian in GDP figures
Chief economic adviser KV Subramanian said there is “upside potential” in estimates for the economy during the current financial year amid a faster-than-expected recovery. He said the final print could be better than GDP estimates provided by various institutions, including the Reserve Bank of India, which projected a 9.5 percent contraction during 2020-21.
Compared to estimates provided by several of the analysts, Subramanian said the second-quarter figures have been more encouraging, which was also previously reflected in the high-frequency indicators.
The sustainability of the economic recovery is fundamentally dependent on the spread of the pandemic, he said, adding that while the peak of the first wave was crossed in September, the winter months should justify caution.
Giving prospects for the near future, he said: “We must be cautiously optimistic and the caution is justified because the economic impact is mainly due to the pandemic.”
Given the uncertainty, he said, it is difficult to predict whether positive territory can be hit in the third or fourth quarter. “I would say that, given what we have seen in the first and second quarters and with the optimism that is being seen in the estimates, I do see an upside potential in that estimate given the good recovery that is occurring,” he said when asked. about growth. estimates for the entire year.
Regarding the second half of the current fiscal year, he said there is uncertainty although there is a strong recovery, especially in the manufacturing sector. “But given the uncertainty, I think it would be difficult to say if we will get a positive result in the third or fourth quarter. My feeling is that we should definitely continue this recovery as long as the pandemic remains under control. “
With PTI inputs
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