India's economy contracted for the second successive quarter but the pace of decline narrowed sharply in the three month period ending September as the farm sector held strong while manufacturing returned to the positive zone.
However, despite the improvement, the Indian economy entered recession in the second quarter.
"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 per cent as compared to 4.4% growth in Q2 of 2019-20", Ministry of Statistics & Programme Implementation said. "It is very hard to predict a number (for the whole year)", he said while cautioning about a fresh wave of Covid-19 as winter sets in. China is the only large economy that posted growth in the September quarter (4.9%). GDP Contraction Slows to 7.5% in July-September 2020-21 Quarter, India Officially Enters Recession. The financial, real estate and professional services sector contracted 8.1 per cent, whereas construction fell 8.6 per cent.
India's economy had struggled to gain traction even before the pandemic, and the hit to global activity from the virus and one of the world's strictest lockdowns combined to deal the country a severe blow.
"Expectedly, the worst for the economy is over".
Sanjay Kumar, CEO & MD, Elior India says he hopes that demand stimulation will take place on the back of the rural economy. However, the GDP growth reading for the second quarter is much better than the economists' forecasts of -8.8 percent. In fact, "public administration, defence and other services" saw a contraction of 12 percent from a year ago, thanks to the stretched finances of both the Centre and the states and the reluctance of the Centre to provide a substantial spending boost. The sector has borne the brunt of the pandemic as hotels, restaurants, cinemas had been shuttered for the longest time and people stayed away due to the fear of infections.
Manufacturing clocked a surprise 0.6 per cent growth in July-September after it had shrunk by a massive 39 per cent in the preceding quarter. CRISIL had pegged the numbers for India for Q2 at less than 10 per cent contraction, down two percentage points. This is just a beginning, ' Rahul said taking to the micro blogging site twitter. "Though the restrictions have been gradually lifted, there has been an impact on the economic activities", it said in a statement.
According to Subramanian, the sustainability of the economic recovery depends critically on the spread of the pandemic.
