Amid the Corona crisis, the country’s economy declined 7.5 percent in the second quarter of July-September of the current fiscal year 2020-21. The economy reported a 23.9 per cent drop in the first quarter April-June due to the corona virus epidemic and its preventive lockdown. This figure of GDP is better than expected as the RBI and rating agency reported more than that ie around 8.6 Percent decline was anticipated. However, technically the country is stuck in an economic downturn, as it has recorded a second consecutive fall in GDP in the September quarter.
GDP rate was so much in July-September last year
According to the data released by the National Statistical Office (NSO), GDP (GDP) grew by 4.4 percent in the same quarter of the financial year 2019-20. Due to the corona virus epidemic and the lockdown imposed for its prevention, the economy suffered a major decline of 23.9 percent in the first quarter of April-June of the current financial year. Now
GDP growth improved in China
It is noteworthy that China’s economic growth rate was 4.9 percent in the July-September quarter, while it increased by 3.2 percent in the April-June quarter.
GDP at constant (2011-12) prices in Q2 of 2020-21 is estimated at Rs 33.14 lakh crores, as against Rs 35.84 lakh crores in Q2 of 2019-20, showing a contraction of 7.5% as compared to 4.4% growth in Q2 of 2019-20: Ministry of Statistics & Program Implementation
– ANI (@ANI) November 27, 2020
Using the immediate forecast method, central bank researchers have estimated that the GDP size will decrease by 8.6 percent in the July-September quarter. Earlier, the RBI had projected a 9.5 per cent decline in GDP in the current financial year. A report prepared by RBI researcher and Pankaj Kumar of the Department of Monetary Policy states that India is technically caught in an economic downturn for the first time in its history in the first half of 2020-21.
Who estimated how much
- The Reserve Bank of India was projected to fall by 8.6 percent in GDP.
- India ratings had forecast a decline of 11.9 percent.
- State Bank had forecast a decline of 10.7 percent, Bank of Baroda by 8 percent.
- In the second quarter, Nomura had predicted a decline in India’s GDP by 10.4 percent and Barclays 8.5 percent.
- The Bank of America Merrill Lynch report estimated GDP to fall by 7.8 percent.
- Morgan Stanley anticipated a 6 percent drop in GDP growth.
- ICRA had projected India’s economic growth to fall 9.5 per cent in the July-September quarter.
- The CARE rating forecast a 9.9 percent drop in GDP growth.
In the simplest terms, the slowdown in an economy is equal to one expansionary phase of recession in any economy. In other words, when the production of goods and services, typically measured by GDP, moves from one quarter (or month) to another, it is called an expansionary phase of the economy. When GDP decreases from one quarter to another, the economy is said to be in a recession.
When is the recession called
At the same time, when the economy slows down for long periods, it is called recession. That is, when GDP is low for a long and sufficient period, it is called recession. While there is no accepted definition of recession, most economists agree with this definition, which is also used by the National Bureau of Economic Research in the US.
According to the National Bureau of Economic Research, during a recession there is a significant decline in economic activity. It can continue for a few months to more than a year. The “depth, spread, and duration” of a decline in economic activity is also determined to see if an economy is in a slump or not. For example, the US has witnessed the most recent decline in economic activity, due to the Corona epidemic. The decline in economic activity has been so much that it has been considered as a recession.