India enters phase of technical recession: RBI
Part of: GS Prelims and GS-III – Economy
- In RBI’s monthly bulletin of November, it has started “nowcasting” or “the prediction of the present or the very near future of the state of the economy”.
- The very first “nowcast” predicts that India’s economy will contract by 8.6% in the second quarter (July, August, September) of the current financial year.
- This pace of contraction is considerably slower than the 23.9% decline in the real GDP during the first quarter.
- However, the contraction of Q2 is crucial because it implies that India has entered a “technical recession” in the first half of 2020-21— for the first time in its history.
Important value additions
- It is a phase when the GDP contracts from one quarter to another.
- When a recessionary phase sustains for long enough, it is called a recession.
- During a recession, a significant decline in economic activity spreads across the economy and can last from a few months to more than a year.
- When real GDP has declined for at least two consecutive quarters.