India enters ‘technical recession’:
A country faces technical recession if there is a negative growth in real gross domestic product (GDP) for two consecutive quarters. Likewise, according to reports India’s economy has entered technical recession due to contraction in GDP for two consecutive quarters.
The economic data released by the National Statistical Office for the July-September quarter has confirmed that the country has entered a technical recession due to the Covid-19 pandemic. The contraction happened even after the government lifted a two months lockdown restriction imposed in March due to the sudden outbreak of Covid-19 Pandemic.
According to the estimated GDP for the second quarter of the year ending points at contraction in economic output by 7.5 per cent. 33,14,167 crores is the overall gross domestic product figure which shows the downfall of output to the lowest level in twelve quarters. As per the reports, for the first time ever since FY15 fiscal spending, consumption plus investments has posted it’s major contraction.
In RBI’s latest bulletin for November, it projected contraction for the second quarter. According to the RBI’s prediction in the current financial year India will witness a contraction of 8.6 per cent in the second quarter.
The contraction is slower when compared to the first quarter’s (April – June) 23.9 per cent decline in the GDP which created massive unemployment, but still the second quarter contraction depicts technical recession for the first time in the country’s history.
In comparison with other countries Indian economy has not seen the worst. India entered the recession phase in the beginning of October month. The UK had been in recession for three consecutive quarters, while Philippines’ real gross domestic product experienced double-digit decline. Few other countries’ economy has also entered the recession phase.
The control over spread of coronavirus may help the economies to come out of the recession to a great extent. Our economy is expected to witness an average growth of 0.3 per cent in two years, according to the recent forecast. However, let’s hope for India to perform better to overcome this current recession period.