Q2 FY21 GDP: India’s economy is anticipated to have undergone a substantial improvement in the second quarter (Jul-Sep) of the existing fiscal year 2020-21 just after the lockdown restrictions had been progressively lifted. While the country’s GDP shrank by a record 23.9 per cent in the fiscal initial quarter due to strict nationwide lockdown and close to-standstill firms, the GDP is estimated to have substantially narrowed contraction to a single digit in Q2. However, it is correct that the Indian economy has most likely fallen into a technical recession as the GDP is anticipated to have shrunk in the two consecutive quarters this fiscal year.
While the Reserve Bank of India has estimated a GDP contraction of eight.six per cent in Q2, Bank of America estimated the shrinkage of 7.eight per cent in the similar quarter. Further, Morgan Stanley, ICRA and Care Ratings have estimated a GDP contraction of six per cent, 9.five per cent, and 9.9 per cent respectively in the second quarter of the existing fiscal.
The most likely optimistic impetus in Q2 is primarily based on two things — anticipation of a choose-up in demand through the festivals and an uptick in corporate profit, which is driven extra by the price-savings rather than top rated-line development. Further, this sudden surge in financial activity is unlikely to sustain in the coming months.
: Economic revival largely due to pent up demand, base impact unlikely to sustain after festivals
The spikes in the production observed in several sectors in the month of October are an exaggeration of the correct recovery on the ground, as these have been driven by a substantial element of pent-up demand that may perhaps not sustain just after the festive period is more than, rating agency ICRA stated in a report. Prominent base effects have also supported the trends in specific sectors, the report added.
The Q2 GDP figures are scheduled to be released on 27 November 2020. The GVA development information about sectoral development in manufacturing, solutions, and agriculture sectors will additional give a clear image about India’s path of financial recovery post-pandemic.