However, the annual GDP estimate for the fiscal yr ending 31 March has been revised to an eight % contraction, deeper than an earlier estimate of (-) 7.7 %
New Delhi: India’s economy returned to progress in the December quarter, ending a recession induced by two successive quarters of financial contraction, and the restoration, which the federal government termed as ‘V’ formed, is predicted to collect tempo.
The Gross Domestic Product (GDP) grew 0.Four % in the October-December 2020 interval in contrast with the identical interval a yr again, information launched by the National Statistics Office on Friday confirmed.
This progress compares with revised contractions of 24.Four % in April-June 2020 and seven.Three % in July-September. GDP had expanded by 3.Three % in October-December 2019.
While India has turn into one of many few main economies to submit progress in the final quarter of 2020, the annual GDP estimate for the fiscal yr ending 31 March has been revised to an eight % contraction, deeper than an earlier estimate of (-) 7.7 %.
China’s economy grew by 6.5 % in October-December 2020, quicker than the 4.9 % progress in July-September 2020.
Commenting on the expansion numbers, the finance ministry in an announcement mentioned actual GDP progress has “returned the economy to the pre-pandemic times of positive growth rates.”
“It is also a reflection of a further strengthening of V-shaped recovery that began in Q2 of 2020-21 after a large GDP contraction in Q1 followed one of the most stringent lockdowns imposed by government relative to other countries,” it mentioned.
Stating that the V-formed restoration has been pushed by rebounds in personal consumption and investments, the ministry mentioned the preliminary coverage alternative of “lives over livelihoods” succeeded by “lives as well as livelihoods” is now bearing optimistic outcomes.
Agriculture, a vibrant spot by means of the pandemic, grew 3.9 % in October-December whereas manufacturing expanded 1.6 % as the economy reopened after a harsh lockdown.
Financial and actual property companies grew 6.6 % however commerce, accommodations, transport, and communication fell 7.7 %. Construction rose 6.2 %.
The optimistic progress ends the recession that the Indian economy had witnessed recently.
Arun Singh, international chief economist, Dun & Bradstreet, mentioned the discharge of pent-up demand fuelled by the festive interval may need added to the marginal optimistic progress in GDP in Q3 FY21.
“Most surprising is the contribution of government spending to the GDP during the third quarter which is a seven-quarter low, even as the government’s stimulus package 3.0 was announced before the festive month,” he mentioned, including that non-public consumption demand, though improved, stays weak.
However, there are dangers to progress that come up from the truth that industrial manufacturing is but to stabilise, core inflation stays stubbornly excessive, oil costs are rearing its head once more and unemployment stays elevated.
Add to that is the danger of spurt in COVID-19 circumstances in some states and the doubtless disruptions to companies and provide chain from the restrictions imposed to curb the potential of a second wave.
“The measures taken by the government to contain the spread of the COVID-19 pandemic have had an influence on the financial actions as properly as on the info assortment mechanisms.
“The data challenges in the case of other underlying macro-economic indicators like IIP (industrial production) and CPI (retail inflation), used in the estimation of National Accounts aggregates and specific measures, if any, taken by the government in the following months with a view to addressing the pandemic led economic situation will have implications on the subsequent revision of these estimates,” the NSO mentioned.
Estimates are, due to this fact, prone to endure sharp revisions for the aforesaid causes in due course, as per the discharge calendar. Users ought to take this into consideration when decoding the figures, it added.
“With a growth re-emerging in both GDP and GVA in Q3 FY2021, the pandemic-induced technical recession in India has ended, in line with our expectations,” ICRA principal economist Aditi Nayar mentioned.
Recouping of GDP to the optimistic territory is a promising signal as it portends the top of the pandemic-induced recessionary part seen in the primary half of the yr, CII director basic Chandrajit Banerjee mentioned.
The progress stimuli obtainable from the Union Budget and the extra measures, together with the PLI (Production Linked Incentives), will result in a sturdy progress path over the restoration horizon, he added.
“The actual push will come in the This fall (January-March) 2021 as a result of lockdowns on many sectors, significantly hospitality and journey eased considerably throughout this quarter.
“It is hoped that it remains that way, given the uptick in COVID-19 cases in some pockets and in some states. Important to note that the states coming under uptick constitute a large part of industrial activity, and that is important for Q4 and the next financial year,” Deloitte India associate Sanjay Kumar mentioned.
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