The Indian economy has grown 0.4% in the third quarter of the ongoing financial year 2020 - 2021 (October 2020 to December 2020) compared to the same period last year, according to latest numbers released by the National Statistics Office. These numbers are part of its second advance estimates for the ongoing financial year and quarterly numbers release.
"GDP at Constant (2011-12) Prices in Q3 of 2020-21 is estimated at ₹ 36.22 lakh crore, as against ₹ 36.08 lakh crore in Q3 of 2019-20, showing a growth of 0.4 percent", says the release.
This government has also revised the contractions witnessed in the first and second quarters of this year. In the first quarter, a contraction of 23.9% has been revised downward to 24.4%. In the second quarter, a contraction of 7.5% has been revised upwards to 7.3%
With this rate of growth, India has exited a technical recession that was triggered by two successive quarters of contraction. This had resulted in a serious hit to the Indian economy due to the lockdown imposed late March 2020 as a health measure to contain the ongoing COVID-19 pandemic.
To provide an anchor to these numbers, the research desk of the State Bank of India predicted 0.3% growth in the third quarter, ICRA Ratings at 0.7% and the Reserve Bank of India, in a bulletin, noted that Q3 growth will be at 0.1%.
The income side of various sectors of the economy, measured by the gross value added, grew 1% quarterly (measure over the same period in the previous year).
- Agriculture and farming grew at 3.9%
- Manufacturing grew at 1.6%
- Electricity, gas, utility and water supply grew the highest at 7.3%, construction at 6.2%
- Real estate, financial, and professional services also grew by 6.6%
- To the contrary, mining and quarrying; government, public administration and defence and trade, hotels, transport, communication and broadcast services declined at 5.9%, 1.5% and 7.7% respectively.
FY21 GDP contraction marginally higher
While India may have regained its growth, it is still expected to contract to the tune of 8% come March 31, 2021 - the end of the financial year. This contraction is much lesser than the near 15% contraction estimated at the start of the pandemic, but is marginally worse than the 7.7% contraction estimated in the first advance estimates.
When measured in gross value added terms, the contraction will be 6.5%.
FY22 estimates are all positive though, as India looks to grow from a much smaller base caused by this contraction. The RBI has estimated that India will grow 10.5%, the government estimates this figure to be 11% and the International Monetary Fund at 11.5%.
Read the full release by the government here.