India’s GDP Contracts 7.5% in Q2; Country in Technical Recession
The official GDP data for second (Q2) quarter of financial year 2020-21 (FY21) was released on Friday.
The official Gross Domestic Product (GDP) for the second quarter from July to September of the financial year 2020-21 contracted 7.5%.
“GDP at constant (2011-12) prices in Q2 of 2020-21 is estimated at Rs 33.14 lakh crores, as against Rs 35.84 lakh crores in Q2 of 2019-20, showing a contraction of 7.5% as compared to 4.4% growth in Q2 of 2019-20,” the Ministry of Statistics & Programme Implementation said.
The ministry said that the real GDP registered a significant improvement in Q2 over the corresponding quarter of previous year vis a vis contraction of 23.9 % registered in Q1 2020-21.
With two straight quarters of GDP contraction, India is has fallen into a technical recession — the first since India began releasing quarterly estimates of GDP in FY98.
Though it’s being seen as an improvement compared to the massive slump in the first quarter, Indian has hit technical recession for the first time.
“Quarterly GVA at basic prices at constant (2011-12) prices for Q2 of 2020-21 is estimated at Rs 30.49 lakh crores, as against Rs 32.78 lakh crores in Q2 of 2019-20, showing a contraction of 7%,” the ministry stated.
The ministry further said that agriculture, forestry and fishing, manufacturing, and electricity, gas, water supply and other utility services witnessed positive growth during the quarter.
“Most of the indicators across industry sectors have shown improvement in Q2 2020-21 as compared to Q1 2020-21,” it said.
The country witnessed a sharp contraction in GDP by 23.9 percent in Q1FY21, following the national lockdown due to COVID-19 pandemic.
- Agriculture sector grew at 3.4% in Q2 compared to 3.4% in Q1.
- Mining sector: Contracted 9.1% in Q2 compared to 23.3% contraction in Q1.
- Manufacturing sector: Grew 0.6% in Q2 after a fall of 39.3% in Q1.
- Electricity and other public utilities: Grew 4.4% against a contraction of 7% in Q1.
- Construction sector: Contracted 8.6% in Q2 compared to a drop of 50.3% in Q1.
- Trade, hotel, transport, communication: Fell 15.6% compared to a contraction of 47% in Q1.
- Financial services sector: Contracted 8.1% compared to a 5.3% contraction Q1.
- Public administration segment: Contracted 12.2% in Q2 versus a fall of 10.3% in Q1.
- Private consumption contracted 11.3% in Q2 compared to a 26.7% drop in Q1.
- Investments, as reflected by gross fixed capital formation, contracted 7.3% compared to a 47.1% fall in Q1.
- Government final consumption expenditure contracted 22.2% in Q2 after growing 16.4% in Q1.
Economy Exhibited Stronger Momentum: RBI Guv Ahead Of Data Release
Reserve Bank of India Governor Shaktikanta Das on Thursday had said that the Indian economy has exhibited stronger pick up in momentum of recovery than expected.
“Even as the growth outlook has improved, downside risks to growth continue due to recent surge in infections in advanced economies and parts of India,” Das said.
“We need to be watchful about the sustainability of demand after festivals and a possible reassessment of market expectations surrounding the vaccine,” he had added.
Besides, he said that monetary policy guidance in October emphasised the need to see through temporary inflation pressures and also maintain the accommodative stance at least during the current financial year and into the next financial year.
“A key source of resilience in recent months has been the comfortable external balance position of India supported by surplus current account balances over two consecutive quarters, resumption of portfolio capital inflows on the back of robust FDI inflows, and sustained build-up of foreign exchange reserves,” he said.
“The Government's recent policy focus to enhance India's participation in global value chains, including through production linked incentives for targeted sectors, can leverage on the strong external balance position of India,” Das added.
(With inputs from IANS and BloombergQuint.)
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