India Exits Recession: 0.4% GDP growth recorded in Q3 of FY 20-21, RBI projects 10.4% growth in next Fiscal Year
In a positive development, the Indian economy is now out of recession as the GDP growth expanded by 0.4% in Q3 of FY 20-21. This implies that the country’s economy is now back on track in the wake of increased economic activity.
This comes two quarters after the GDP contracted consecutively – 23.9% in the April – June quarter and 7.5% in the July – September quarter, attributed to the Covid-19 induced nationwide lockdown. The country had slipped into a technical recession in the July-September period for the first time since Independence.
The .4% GDP expansion holds significance as the country exits this recession and moves on to a growth of 10.5% in FY 21-22, as projected by the Reserve Bank of India in its Monetary Policy Review.
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. India Ratings and Research has suggested that the GDP growth will bounce back to 10.4% year on year in the next fiscal year.
Moody’s had also revised its forecast to a 7% contraction for the current fiscal year, ending in March, from an earlier estimate of a 10% contraction. It predicted 13.7% growth for the next fiscal year, assisted by the resumption of economic activities.
Notably, India was among the worst affected countries due to the Covid-19 pandemic and is one of the few major economies to post growth in the last quarter of 2020.
