The Gross Domestic Product (GDP) data released on Friday reveals a contraction of 7.5 per cent in the second quarter of 2020-21 as compared to the same period last year. While it is much better than the 23.9 per cent contraction recorded in the first quarter, the data also reveals that the country is in a technical recession.
Notably, the 23.9 per cent contraction was the worst that India has seen in decades and is attributed to the coronavirus pandemic and the resultant lockdown. The decline in the second quarter is also due to the coronavirus pandemic that has considerably affected livelihoods and businesses.
Recently, economists in RBI had predicted that Indian is in a technical recession and the second quarter data released by the National Statistical Office has confirmed the same. A technical recession is defined as negative GDP growth in two consecutive quarters.
Economy expected to recover in 2021
The economy is expected to recover early next year on hopes of better consumer demand fuelled by progress on coronavirus vaccines, say economists, who have marginally raised forecasts following a pickup in consumer demand for automobiles, non-durables and rail freight during the festival season.
Recently, the government announced additional stimulus measures under 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, taking the total monetary and fiscal aid in the country’s battle against COVID-19 to Rs 29.88 lakh crore or 15 per cent of its GDP.
China’s GDP rises by 4.9%
Meanwhile, China’s economy grew by 4.9 per cent in July-September this year, faster than the 3.2 per cent growth in April-June 2020.
The coronavirus pandemic that began from China has engulfed the entire world, with the United States becoming the worst-affected country followed by India and Brazil. As far as India is concerned, the case tally has already crossed 93.09 lakh, whereas deaths have surpassed 1.35 lakh.
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