In the July-September quarter of the current financial year, the country’s economy contracted by 7.5 per cent. Due to the lockdown, the country’s gross domestic product (GDP) declined by 23.9% in the second quarter. Technically, the country is mired in recession, as GDP fell for the second consecutive year in the September quarter.
GDP is estimated at Rs 33.14 lakh crore in Q2 of 2020-21, which is estimated to be Rs 35.84 lakh crore in Q2 2019-20, showing a contraction of 7.5% compared to 4.4% growth in Q2. 2019-20: Ministry of Statistics and Program Implementation
– ANI (@ANI) November 27, 2020
Using an immediate forecasting methodology, central bank researchers estimate that GDP size will fall by 8.6 percent in the July-September quarter. Previously, RBI had expected a 9.5 per cent drop in GDP in the current financial year. Pankaj Kumar, a RBI researcher and Department of Monetary Policy, said in a report that India is experiencing a recession for the first time in its history in the first half of 2020-21.
Who estimates how much
- The Reserve Bank of India is expected to drop 8.6 per cent of its GDP.
- India ratings forecast a drop of 11.9 per cent.
- State Bank of India forecast a decline of 10.7 per cent and Bank of Baroda 8 per cent.
- In the second quarter, Nomura had a 10.4 per cent decline in India’s GDP and Barclays 8.5 per cent.
- The Bank of America Merrill Lynch report estimates GDP to fall by 7.8 percent.
- Morgan Stanley expects GDP growth to fall by 6 percent.
- ICRA had forecast India’s economic growth to fall by 9.5 per cent in the July-September quarter.
- The CARE rating forecasts a 9.9 percent decline in GDP growth.
Simply put, the sluggishness of the economy is a phase of the slowdown of any economy. In other words, the production of goods and services is usually measured by GDP, moving from one quarter (or month) to another, known as the expansion stage of the economy. When GDP decreases from one quarter to another, the economy is said to be in recession.
When is the recession called
At the same time, when the economy slows down for a long time, it is called a recession. That is, when GDP is low for a long and sufficient period, it is called an economic downturn. Although there is no consensus definition of recession, most economists agree with this definition, which is also used by the US National Economic Research Bureau.
According to the National Bureau of Economic Research, there has been a significant decline in economic activity during the recession. It can last from a few months to more than a year. The “depth, spread and duration” of economic activity is also determined by whether or not the economy is in recession. For example, the recent decline in US economic activity due to the corona epidemic has been witnessed. The downturn in economic activity is considered an economic downturn.
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