India in historic recession, signals RBI

Michael Patra

New Delhi: India’s economy probably shrank for a second straight quarter, pushing the country into an unprecedented recession, according to a team of economists including Michael Patra, Reserve Bank of India’s Deputy Governor in-charge of monetary policy.

GDP contracted 8.6 per cent in the quarter ended September, the Reserve Bank of India showed in its first ever published ‘nowcast,’ which is an estimate based on high-frequency data. The economy had slumped about 24 per cent in April to June.

“India has entered a technical recession in the first half of 2020-21 for the first time in its history,” the authors stated. The government is due to publish official statistics 27 November.

The median forecast in a Bloomberg survey of economists sees a contraction of 10.4 per cent in the July-September quarter.

After an unprecedented decline of 23.9 per cent in GDP in April-June as estimated by the National Statistical Office on August 31, the central bank has ‘nowcast’ that Gross Domestic Product (GDP) for July-September quarter is set for a contraction of 8.6 per cent.

The NSO estimates for the second quarter expected at the end of November 2020 will formally bear out the extent of improvement that occurred in the quarter gone by, the RBI said in a ‘State of the Economy’ report.

 

NT Bureau