Economic revival from the economic recession

Introduction

After two-quarters of a sharp contraction, India’s economy is estimated to have rebounded out of a ‘technical recession’ to record feeble growth in the October-December 2020 period, with GDP rising by 0.4% and GVA by 1%.

Reboot in production lines

The ‘unlocking phase’ that was largely complete by late September, brought back a semblance of normalcy, with pent-up and festival demand spurring spending, and helping reboot production lines.

Agriculture sector: Agriculture remained the resilient bulwark in the third quarter as well, with farm GVA rising by 3.9% after being the sole sector to clock growth in the preceding two quarters.
Manufacturing and construction sector: Manufacturing and construction resurfaced from a collapse to expand 1.2% and 6%, respectively.
- Both these sectors had been under stress even before the pandemic, posting contractions starting from the second and third quarters of 2019-20.
Public Spending: Despite the Centre’s push on government spending, public administration, defence and other services contracted 1.5% last quarter.
- However, investment demand is estimated to have rebounded, with fixed capital formation posting positive momentum after several quarters, driven perhaps by public spending.
Service Sector: Most worryingly, retail, trade, hotels, transport and communication contracted by 7.7%.

Macroeconomic data

Wider contraction of GDP in 2021-22: Despite the Q3 uptick, the second advance estimates of national income for the year project an 8% contraction in the GDP, wider than the – 7.7% estimated in January.
- This may partly be due to the NSO revising the first quarter’s GDP shrinkage to 24.4%, from the 23.9% calculated earlier.
Real GDP growth: Like the growth rate for 2019-20 was revised from 4.2% to 4% in January, the real GDP growth for the third quarter of the last fiscal has been scaled down to 3.3%, from 4.1%.

Conclusion

Growth numbers alone may still not be capturing the tumult faced by swathes of informal and micro-enterprises, nor do they reflect a recovery in the job market.
The continuing stress in employment- and contact-intensive services sectors is a worry, and the government must consider support measures.

Source: TH

Join Our Telegram

Marital rape-Rape and Marriage

Financial Action Task Force (FATF) -Pakistan still in grey list

Oceanic Anoxic Event 1a and MASS EXTINCTION

25 Dec, 24
SHARE

Oceanic Anoxic Event 1a from the Paris Basin (Environment) Paper-3 PMP OAE 1a refers to a period during the Cretaceous Period (145 million years ago and ended 66 million years ago) when Earth's oceans became depleted of oxygen, causing a significant disruption in marine life. Cause: The event is believed to have been

Viksit Panchayat Karmayogi (Good governance)

26 Dec, 24
SHARE

Viksit Panchayat Karmayogi (Good governance) Governance GS PAPER-2 PMP Dr. Jitendra Singh launched the ‘Viksit Panchayat Karmayogi’ initiative on Good Governance Day, celebrated to mark the 100th birth anniversary of former Prime Minister Atal Bihari Vajpayee. The initiative, which is part of the broader ‘Prashasan Gaon

Major programmes to control Air Pollution

23 Dec, 24
SHARE

Major programmes to control Air Pollution National Clean Air Programme? It was launched by the Ministry of Environment, Forests and Climate Change (MoEFCC) in January 2019. It is the first-ever effort in the country to frame a national framework for air quality management with a time-bound reduction target. The

Air pollution and Air quality Measures in India

21 Dec, 24
SHARE

Air pollution and Air quality Measures in India (Environment) GS Paper-3 P-M-P Air pollution may be defined as the presence of any solid, liquid or gaseous substance including noise and radioactive radiation in the atmosphere in such concentration that may be directly and/or indirectly injurious to humans or other l

Geopolitical Significance of Ports

20 Dec, 24
SHARE

Geopolitical Significance of Ports (IR) Act as geopolitical assets: Ports enhance the projection of strategic reach, which helps strengthen the country’s control over important sea and energy supply routes. E.g. Indian Navy’s staging base at Agalega Islands will enable marine patrols