India’s gross domestic product (GDP) contracted 7.5 per cent in the July-September period, as the economy rebounded from a record slump of 23.9 per cent in the previous quarter due to slowdown caused by the coronavirus pandemic.
Today’s data confirms economic recession – which is two consecutive quarters of GDP contraction – since 1996, when the country began quarterly records. The GDP reading for the second quarter of current financial year is much better than economists’ forecasts of 8.8 per cent in a poll by news agency Reuters.
Giving outlook for the near future, Chief Economic Advisor Krishnamurthy Subramanian said, “We should be cautiously optimistic and the caution is warranted because economic impact is primarily due to the pandemic.”
“Till the pandemic does not go away, some of the sectors that are affected by social distancing will continue to experience demand slump,” he said.
Given the uncertainty due to Covid-19 pandemic, he said, it is difficult to predict if positive territory can be hit in the third or fourth quarter of this financial year.
“I would say that the given what we have seen in Q1 and Q2 and with the optimism that is being seen in the estimates, I do see upside potential in that estimate given the good recovery that is happening,” he said.
“Till large sections of the population are not vaccinated, pandemic protocols must be followed religiously. Overall, while recovery provides optimism, caution on the pandemic and therefore on the economy is still warranted,” Mr Subramanian added.