NEW DELHI: India’s economy, on a slowdown path since March 2018 and pummelled by the coronavirus pandemic, has officially entered recession with GDP growth contracting 7.5% year-on-year in the July-September 2020 quarter.
This is, however, a notable improvement from the mind-numbing 23.9% decline in the previous three-month period (April-June 2020). Recession is when economic growth rate is negative for two consecutive quarters or more.
Assuming a 5-6% trendline growth, the effective output loss during the first half of the current fiscal is upwards Rs 20 lakh crore. On the brighter side, the data released by the National Statistics Office on Friday have come as a relief as various projections had pegged GDP growth to be much worse.
Even Reserve Bank of India’s forecast was a contraction of 8.6%. This, according to economists, shows the economy is healing faster than thought. In absolute numbers, national output fell to Rs 33.14 lakh crore from Rs 35 lakh crore recorded in the year-ago period. In the previous quarter, it had stood at Rs 26.9 lakh crore. So, on a sequential basis, it amounts to a growth of 23.2%.
While the danger of a second wave of the pandemic still looms large, experts believe the worst may be over as most economic parameters have improved on the back of resumption in economic activities. For example, manufacturing and electricity sectors bounced back, growing 0.6% and 4.4%, respectively. Agriculture continued to grow, at 3.4%, while the trade and services sector showed lower-than-expected contraction at 15.6%.
Core output shrinks
Contracting for the 8th straight month, the output of eight core infra sectors fell 2.5% in October, mainly due to decline in production of crude oil, natural gas, refinery products and steel