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”.
Key takeaways
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.
Importantvalue additions
Recessionary phase
It is a phase when the GDP contracts from one quarter to another.
Recession
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.
Technical recession
When real GDP has declined for at least two consecutive quarters.
