New Delhi: The road to recovery appears to be in sight for the Indian economy, with the country’s gross domestic product growing by 40 basis points or 0.40 per cent in the October-December quarter. The size of the economy had shrunken in the April-June quarter and July-September quarter, pulling down the country into a technician recession. However, the positive growth — though not very strong yet — has taken the Indian economy out of the recession.
A consistent growth in consumer demand, festive spends and a jump in government expenditure appear to have supported the Covid-battered economy to spring back into the positive territory. The expenditure trend, however, remains weak as government and private consumption expenditure continued to contract in the third quarter.
"The GDP at constant (2011-12) prices in Q3 of 2020-21 is estimated at Rs 36.22 lakh crore, as against Rs 36.08 lakh crore in Q3 of 2019-20, showing a growth of 0.4 per cent," data released by the ministry of statistics and programme implementation showed on Friday.
The Indian economy had grown at the rate of 4.7 per cent in the same quarter last year.
According to the data released by the National Statistical Office (NSO), the farm sector recorded a growth of 3.9 per cent, and the manufacturing sector output grew by 1.6 per cent. The construction sector advanced by 6.2 per cent, while electricity, gas, water supply and other utility services clocked a 7.3 per cent growth.
Trade, hotels, transport, communications and services related to broadcasting continued to bore the brunt of post-Covid consumer behaviour. These segments posted a 7.7 per cent contraction in the third quarter.
Economists and rating firms had widely expected India's GDP to grow in the third quarter on the back of higher economic activity and reducing the number of coronavirus cases in the country. They are also hopeful that India's economic growth in the fourth quarter will improve further due to the mass vaccination drive that started in the country in January.
While the third-quarter data suggested buoyancy in the economy, the NSO revised its growth projection for the fiscal 2020-21 marginally downwards by 30 basis points or 0.30 per cent.
Compared to the projection of 7.7 per cent of degrowth in January, the government expects the economy to degrow by eight per cent, signalling a weaker than expected rebound in the March quarter.
The NSO, however, added a disclaimer stating that the measures taken by the government to contain the spread of the Covid-19 pandemic have impacted the economic activities as well as the data collection mechanisms. “Estimates, therefore, are likely to undergo sharp revisions for the aforesaid causes in due course.”