India’s GDP contracts 7.5% in second quarter

India’s GDP contracts 7.5% in second quarter

Part of: GS Prelims and GS-III – Economy

In news

• As per estimates released by the National Statistical Office, India’s GDP contracted 7.5% in the second quarter of 2020-21.
• In the first quarter, India had recorded 23.9% decline. 

Key takeaways

• India has now entered a technical recession with two successive quarters of negative growth.
• Agriculture, which was the only sector to record growth between April and June this year, grew at the same pace of 3.4% in the second quarter.
• Manufacturing gross value-added (GVA) showed a sharp recovery to record 0.6% growth between July and September after collapsing 39.3% in the first quarter.
• Electricity, gas, water supply and other utility services also recorded 4.4% growth in the second quarter, recovering from a 7% contraction in Q1.
• But it remained a weak quarter for several sectors, including mining, services such as retail trade and hotels, construction and financial services.
• While the 7.5% contraction in GDP came as a positive surprise, there are concerns about a decline in government spending and the worsening fate of two key sectors compared to the first quarter.