The Strategist

India's economy emerges from technical recession

03/01/2021 - 05:06

India's GDP in the third quarter of fiscal 2020-2021 was 0.4 per cent, thereby bringing the country out of a technical recession, the ministry of statistics and programme implementation said.

India's GDP declined by 7.5 per cent in the second quarter of fiscal 2020-21, marking the first time in history that the country has entered a technical recession due to consecutive declines in GDP for two quarters. 

In the first quarter of fiscal 2020-21, India's GDP fell by 23.9%, the worst growth rate for the country since 1966, when India began publishing quarterly data, and the worst among major economies in Asia.

Economists have raised their forecasts for the current and next fiscal years, expecting government spending, consumer demand and a rebound in most economic activity.

India's central bank in early February projected GDP growth of 10.5% for 2021-2022, slightly behind the IMF's forecast of 11.5% growth for India over that period.

However, a number of analysts have warned that the recent rise in oil prices and a spike in COVID-19 cases in parts of India could pose risks to economic recovery. It is noted that a number of industries, notably retail, air travel, hotels and hospitality, are yet to recover from the impact of the pandemic.