Gross Domestic Product (GDP) of India
went on for a toss since the COVID-19 Pandemic havoc occurred. Q2 results of GDP
were released on 27th of November and the economists were expecting
it to be better than the previous quarter results.
India''s gross domestic product (GDP)
is widely projected to decline over the July-September period, but at a slower pace
compared to the previous quarter, as business and economic activities pick up
after the upliftment of lockdown on businesses and industrial markets in India
after months of coronavirus-induced downturn. Official data which was released
on , 27th November 5:30 pm showed that the economy has entered its
first technical recession since 1996, when the nation started to
keep quarterly records, which is two consecutive quarters of a contraction
According to official data, the gross
domestic product (GDP) contracted 7.5 per cent during the July-September
period, resulting in an ongoing historic recession in the economy. The Q2
GDP data showing a fall in numbers comes after a near 24 percent contraction in
the previous quarter. Although data from the latest quarter showed minor signs
of a pick-up following the easing of restrictions caused by coronavirus,
economists and experts have differentiated views on the same.
Economists expected the country''s GDP
to contract by 8.8 percent in the quarter ended September 30. Forecasts
predicted a 3% contraction in the December quarter, followed by a 0.5%
expansion in the final January-March portion of the 2020-21 financial year. Meanwhile
the limitations associated with COVID-19 have triggered thousands of job losses
and forced much of the workforce to remain indoors which resulted into a
significant blow to an already-slowing economy.
Agriculture and Manufacturing raised.
Agriculture raised again as
predicted, recording a growth of 3.4 percent for the second consecutive
quarter. But manufacturing was the surprise. Against predictions of a
contraction of as much as 9 percent by some analysts, the gross value added of
manufacturing showed a rise of 0.6 percent. Analysts had of course, predicted
performance to show progress from a horrific first quarter. The bounce back,
however, was more than expected.
In contrast to its Asian peers, the
contraction in GDP at -7.5 per cent is one of the worst. Though it is milder than
what was expected by the market. This is undoubtedly a cause for concern, and
perhaps some more recovery in the coming quarter can be expected with the
easing of monetary policy. There is a clear need for fiscal stimulus now,
considering the fact that the economy is officially in recession, as monetary
policy intervention alone will not be able to help us single handedly to come
out of this situation. Other fields of income for the economy has to perform
well in order to gradually come out of this position.
Although the GDP report, which turned
out to be better than expected, suggested that the economy may be doing well
but it may not be sufficient to upgrade the FY21 forecast for a milder
recession. The rising covid-19 cases in some states that may cause new
limitations are a key threat in the making. The economic crosswinds are still
heavy, which should keep policymakers in the next few quarters on edge.