New Delhi (NVI): India has officially entered into a technical recession after its Gross Domestic Product (GDP) slipped by 7.5 per cent in the July-September quarter (Q2), as per estimates released by Ministry of Statistics and Programme Implementation (MoSPI).
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@Rao_InderjitS@PIB_India@NITIAayog@PMOIndia
— Ministry of Statistics & Programme Implementation (@GoIStats) November 27, 2020
The Indian economy contracted for the second straight quarter, albeit at a slower pace, as restrictions to curb the spread of COVID-19 were eased and economic activity resumed.
With this, the economy has officially entered into a technical recession for the first time since 1996, when the country began recording quarterly growth rates. In economics, when the GDP growth is negative for two consecutive quarters or more, it is termed as recession.
Furthermore, in gross value added terms, the economy contracted 7 per cent compared to a contraction of 22.8 per cent last quarter.
However, according to MoSPI data, the agriculture sector reported a growth of 3.4 per cent, while another sector registering a positive growth was electricity which registered a growth of 4.4 per cent in Q2 of FY 2021.
Earlier, Reserve Bank of India’s (RBI) internal model had anticipated a GDP contraction of 8.6 per cent for the July-September quarter.
In the April-June quarter, the Indian economy had contracted by a whopping 23.9 per cent on the back of a strict coronavirus lockdown from the last week of March till early May.