Bikky Khosla | 01 Dec, 2020
Gross Domestic Product (GDP) of the
Indian economy contracted by (-) 7.5 percent in second quarter of the 2020-21
financial year, against 4.4 percent growth in the corresponding quarter of
FY2019-20. No doubt, comparing these data sets does not seem relevant now, and
instead the 7.5 percent decline data has now been met with all-round cheers against
(-) 23.9 percent contraction in the preceding quarter. The
pace of recovery has come as a pleasant surprise to economy watchers.
The latest figures have substantially changed how the
Indian economy is being viewed. The first quarter GDP decline was one of the
worst among the major economies, but now the second quarter contraction is far better
than the global average. A report shows that average July-September GDP decline
of 49 countries stands at 12.5 percent, while in comparison, India’s 7.5
percent looks much better. This is why, though India is now into
a technical recession, sentiments are still widely positive.
Another positive development is that the
second quarter recovery is fairly broad-based.
The Gross Value Added (GVA) data shows 3.4 percent growth in agriculture,
similar to the expansion seen in Q1; 4.4 percent growth in power and other
utilities against 7 percent contraction in Q1; 8.6 percent contraction in construction
sector against 50.3 percent contraction in Q1; and (-) 15.6 percent contraction
in trade, hotels, transport, communication and services related to broadcasting
against a massive 47 percent contraction in first quarter.
The most astonishing
aspect of the latest GDP data set is the positive growth registered by the
manufacturing sector. Though the sector grew a meagre 0.6 percent, this growth has
been achieved after four quarters of constant decline. According to economy watchers,
it is surprising how, despite being the worst affected sector
during the first quarter due to lockdown, the manufacturing sector turned
itself around in the July-September period. This pleasant surprise, without an
iota of doubt, is welcome, however.
I
invite your opinions.
