India's GDP Contracts 7.5 % in July-September, Economy Enters Technical Recession
Workers at a footwear factory in Haryana's Bahadurgarh. (AFP File Photo)
India's Gross Domestic Product (GDP) contracted 7.5% in the July-September period in comparison to the same period last year, according to data released by the National Statistical Office on Friday. With this, India has performed the poorest among major advanced and emerging economies and entering a technical recession for the first time since independence.
The pandemic-induced lockdowns had led to a steep contraction of 23.9% in the GDP for the April-June quarter as compared to the same period a year ago.
The two successive quarters of contraction mean that the country has now entered a "technical recession" for the first time since 1947.
The Reserve Bank of India (RBI) has estimated that the economy will contract by 9.5% for the full fiscal year.
The index is constructed from 27 monthly indicators using a dynamic factor model and suggests that the economy rebounded sharply from May/June 2020 with the reopening of the economy, with industry normalising faster than contact-intensive service sectors.
China's economy grew by 4.9% in July-September this year, faster than the 3.2% growth in April-June 2020.
After virus-led lockdowns ravaged the globe, the growth recorded by major economies including the United States, Japan and Germany during the quarter ending on September 30 raised expectations that India would also enjoy a revival.
But, while consumer businesses saw a boost due to increased spending in the run-up to the October-November festive season, hopes of a broader recovery were dashed, with the construction and hospitality sectors taking a hit.
India has struggled to kick-start an economy that is expected to shrink 9.5% this year, according to estimates released by India's central bank governor Shaktikanta Das last month. Meanwhile, the International Monetary Fund has predicted that India's economy would contract by 10.3% this year, the biggest slump for any major emerging economy and the worst since independence.
A report by Oxford Economics released earlier this month said that India would be the worst-affected economy even after the pandemic eases, stating that annual output would be 12% below pre-virus levels through 2025.
(With inputs from AFP)