India officially enters technical recession, GDP contracts by 7.5 percent in Q2 of FY21

The GDP at Constant (2011-12) Prices in Q2 of FY 2020-21 was estimated at Rs 33.14 lakh crore, as against Rs 35.84 lakh crore in Q2 of FY 2019-20. 

Created On: Nov 28, 2020 15:10 ISTModified On: Nov 28, 2020 19:10 IST
India's GDP contracts

The Indian economy contracted by 7.5 percent in the second quarter of the fiscal year 2020-21 (July to September), as per government data that was released on November 27, 2020.  With this contraction, India officially entered a technical recession for the first time. 

The contraction is a rebound from the earlier quarter of the fiscal year 2020-21. India's economy had contracted by 23.9 percent in the April to June quarter (Q1 FY21), which marked the first contraction in more than 40 years as the COVID-19 pandemic majorly impacted consumer demand and private investments.

According to the Ministry of Statistics and Programme Implementation, the gross value added (GVA) came in at minus 7 percent during the second quarter of FY21. 

Key Details 

The GDP at Constant (2011-12) Prices in Q2 of FY 2020-21 was estimated at Rs 33.14 lakh crore, as against Rs 35.84 lakh crore in Q2 of FY 2019-20. This shows a contraction of 7.5 percent as compared to 4.4 percent growth in the second quarter of the Fiscal Year 2019-20.

The quarterly GVA at Basic Prices at Constant (2011-12) Prices for the second quarter of FY 2020-21 was estimated at Rs 30.49 lakh crore, as against Rs 32.78 lakh crore in Q2 of 2019-20. This showed a contraction of 7 percent.

The second quarter of FY 2020-21 saw a -15.6 percent drop in trade, transport, communication and hotels. On the other hand, defence, public administration and other services saw a contraction of -12.2 percent.

Further, the real estate, financial and professional services sector saw a contraction of 8.1 percent and construction by 8.6 percent.

Sectors that showed a rebound in Q2 FY21

Some sectors bounced back with the resumption of economic activities, as electricity, water supply, gas and other utility services showed a growth of 4.4 percent. 

Other sectors including agriculture, the fishing sector and forestry also showed 3.4 percent growth and the manufacturing sector showed a marginal growth of 0.6 percent.

Background

The Indian economy was already slowing before the pandemic struck, growing only 4.2 percent in the last fiscal year, its slowest pace in 11 years. 

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