INDIA’S GDP CONTRACTS 7.5% IN SECOND QUARTER

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CONTEXT:

As per estimates released by the National Statistical Office, India’s GDP contracted 7.5% in the second quarter of 2020-21.

MAIN POINTS:

1. India has now entered a technical recession with two successive quarters of negative growth.
2. Agriculture, which was the only sector to record growth between April and June this year, grew at the same pace of 3.4% in the second quarter.
3. Manufacturing gross value-added (GVA) showed a sharp recovery to record 0.6% growth between July and September after collapsing 39.3% in the first quarter.
4. Electricity, gas, water supply and other utility services also recorded 4.4% growth in the second quarter, recovering from a 7% contraction in Q1.
5. But it remained a weak quarter for several sectors, including mining, services such as retail trade and hotels, construction and financial services.
6. While the 7.5% contraction in GDP came as a positive surprise, there are concerns about a decline in government spending and the worsening fate of two key sectors compared to the first quarter.

SOURCE: PIB