At -7.5%, GDP in revival mode, but economy slips into recession

The gross domestic product (GDP) had contracted by 7.5 per cent in the July-September period of 2020-21, according to the Ministry of Statistics and Programme Implementation.

Business Desk, ETV Bharat:Showing signs of revival, the de-growth in the Indian economy eased to 7.5 per cent in the July-September quarter (Q2) compared to 23.9 per cent in the April-June quarter (Q1) of the current fiscal.

“Real GDP registered a significant improvement in Q2 2020-21 with a contraction of 7.5% over the corresponding quarter of previous year vis a vis contraction of 23.9% registered in Q1 2020-21,” said the Ministry of Statistics and Programme Implementation.

As against the April-June quarter which saw almost all the sectors posting negative growth rates, most of the indicators have shown improvement in the Q2 2020-21 as compared to Q1 2020-21.

“Agriculture, Forestry, Fishing, Manufacturing, Electricity, Gas, Water Supply and Other Utility Services witnessed positive growth during the quarter,” said the ministry.

Technical recession

If the economy contracts in two successive quarters, it can be said to be in a recession.

Going by this standard definition, the Indian economy is undergoing a recession as it shrank 23.9% in the first quarter of this fiscal followed by 7.5 per cent contraction.

It may be recalled the economy saw its worst contraction in nearly four decades on the back of nationwide lockdown starting from March 25.

However, the economy showed some signs of revival as the government started unlocking the economy in June followed by the Dussehra-Diwali festive season.