The gross domestic product (GDP) expanded 0.4 per cent in the three months ended December 2020, after contracting in two consecutive quarters, data released by the National Statistical Office (NSO) showed.
India is among the few major economies to post growth in the last quarter of 2020. But the recent resurgence in Covid19 cases in select pockets of the country is a cause for concern, given the inverse relationship between economic growth and fall in Covid-19 infections.
India’s quarterly GDP growth had slid by record margins for two consecutive quarters due to the Covid-19 virus outbreak. The GDP contracted by a massive 23.9 per cent in the June quarter amid the pandemic-led nationwide lockdown and by 7.5 per cent during the September quarter. In fact, India slipped into a technical recession in the July-September period as the domestic product (GDP) fell for two successive quarters.
The median forecast from a survey of 58 economists by Reuters this week had predicted the gross domestic product to grow 0.5 per cent year-on-year in the December quarter
Meanwhile, in its Monetary Policy Review presented on February 5, the Reserve Bank of India has projected a GDP growth of 10.5 per cent in financial year 2021-22.
Economists have raised their forecasts for the current and next fiscal year, expecting a pick-up in government spending, consumer demand and resumption of most economic activities.
Moody’s revised its forecast to a 7 per cent contraction for the current fiscal year, ending in March, from an earlier estimate of a 10 per cent contraction. It predicted 13.7 per cent growth for next fiscal year, helped by resumption of economic activities.
And India Ratings and Research (Ind-Ra) has suggested that the gross domestic product (GDP) growth will bounce back to 10.4 per cent year on year (y-o-y) in the next fiscal year, primarily driven by the base effect.