Gross domestic product contracted 8.6% in the quarter ended September, the Reserve Bank of India showed in its first ever published ‘nowcast,’ which is an estimate based on high-frequency data. The economy had slumped about 24% in April to June.
“India has entered a technical recession in the first half of 2020-21 for the first time in its history,” the authors wrote. The government is due to publish official statistics November 27.
The Reserve Bank’s number is buoyed by cost cuts at companies that boosted operating profits even as sales dipped. The team of authors also used a range of indicators from vehicle sales to flush banking liquidity to signal brightening prospects for October. If this upturn is sustained, the Indian economy will return to growth in the October-December quarter, earlier than projected by Governor Shaktikanta Das last month, when he pledged to keep monetary policy accommodative.
However, “there is a grave risk of generalization of price pressures, unanchoring of inflation expectations feeding into a loss of credibility in policy interventions,” the team of economists wrote in the Reserve Bank’s bulletin. They also highlighted risks to global growth from a second wave of coronavirus infections.
“Lurking around the corner is the third major risk -- stress intensifying among households and corporations that has been delayed but not mitigated, and could spill over into the financial sector,” the economists concluded. “We live in challenging times.”
Download The Economic Times News App to get Daily Market Updates & Live Business News.
54 Comments on this Story
AT Indian13 days ago
Lets hope and pray that Indian economy and global world economy returns to normal after pandemic
Black Beans13 days ago
The Psychology of Money
Abhay Dodiya14 days ago
Mr.Yash! The example of per capita income is not valid in indian context, because we are leaving in highly uneven income distribution scenario, mean value doesn't reflect the real income distribution. There is skew in per capita income because the top one percent of people control over 60% of the country's wealth. Imagine a scenario if person who report income less than 5 lakh still own Fortuner.