India’s economy shrank 7.5 per cent in the fiscal second quarter, after seeing a record contraction of 23.9 per cent in Q1. With the contraction in two successive quarters, India has entered into a technical recession in the first half of the current fiscal. However, the economy substantially narrowed contraction to a single digit in Q2.
“The GDP decline was primarily because of the intensity of the lockdown. India’s economic performance now on is linked to the pandemic and how the govt tackles” said the Chief Economic Adviser.
A rebound in manufacturing and electricity generation, and sustained farm output growth supported the economic recovery in the September quarter, showed official data released by the statistics ministry. However, with two consecutive quarters of contraction, the economy is technically in recession at the end of the second quarter.
The manufacturing and construction sectors made a jump in the July-September quarter. While the fall in construction sector narrowed from 50.3 per cent in Q1 to 8.6 per cent in Q2, the manufacturing sector registered a 0.6 per cent growth in Q2, against a contraction of 39.3 per cent in Q1.
The mining sector also improved by reducing the contraction of 23.3 per cent in Q1 to 9.1 per cent in Q2. On the other hand, the agriculture sector once again registered a growth of 3.4 per cent in Q2.
Meanwhile, the output of core industries shrank more in October, than in September. It shrank 2.5 per cent in October, against a fall of 0.8 per cent in the previous month.
The farm sector growth, which showed some resilience during the lockdown in the June quarter, sustained the performance in the September quarter too on account of improved Kharif sowing and robust and widespread monsoon. Agriculture GVA grew 3.4% in the September quarter, repeating the 3.4% expansion in the first.