India officially exits ‘technical recession’

The Indian economy may not be out of the woods but it has surely snapped out of what has been dubbed as ‘technical recession.’

The bounce is manifest in a 0.4 per cent growth in the GDP in the December quarter; in the October-December period, it was in negative terrain, marked by two consecutive quarters of GDP contractions.

The gross domestic product had expanded by 3.3 per cent in the corresponding period of 2019-20, according to the data released by the National Statistical Office.

This is India’s first tentative step on the growth trajectory after slipping into a recessionary phase following the 7.5 per cent contraction in the second quarter of FY21. The situation was even worse in the first quarter when GDP slumped 23.9% owing to a nationwide Covid lockdown. The outlook seems to be one of cautious optimism and a Reuter survey conducted by 58 economists this week had predicted the gross domestic product to grow 0.5 per cent year-on-year in the December quarter.

Most economists have raised their projections for the current and next fiscal year, expecting a pickup in government spending, consumer demand and resumption of most economic activities.

In its Monetary Policy Review presented on Februar y 5, the Reserve Bank of India has projected a GDP growth of 10.5 per cent in financial year 2021-22. The International Monetary Fund expects India to grow at 11.5 per cent in the same period, reports NDTV. However, on the flip side, latest data suggests the production of India's eight major industries remained flat on a year-on-year basis during Januar y 2021. The Index of the eight core industries for last month showed a rise of just 0.1 per cent in output, as against an expansion of 2.2 per cent in the same month last year. On a sequential basis, the output of eight major industries had expanded by 0.2 per cent in December 2020.

BLOODBATH ON SENSEX: The Indian stock market witnessed a bloodbath on Friday with the benchmark indices falling nearly 4 per cent. The BSE Sensex ended over 1,900 points lower, while the Nif ty50 on the National Stock Exchange plunged nearly 570 points. The frenzy in the Indian equities followed a global sell-off af ter a massive jump in the 10-year bond yields in the US. Gaurav Garg, Head of Research at CapitalVia Global Research said: "Global signals today are extremely negative against the backdrop of a massive jump in 10-year bond yields in the US. We can see a downtrend and it will be negative for the market."