New Delhi: India’s Gross Domestic Product (GDP) had contracted 7.5% in the second quarter, July-September period and with it, the country had entered a technical recession. Now according to the Finance Ministry’s latest Monthly Economic Review, the Indian economy is witnessing a V-shaped recovery. The document says that the GDP has recorded a quarter-on-quarter growth of 23% in the July-September quarter of this fiscal.
The review said that the recovery ‘reflects the resilience and robustness of the Indian economy. The fundamentals of the economy remain strong as gradual scaling back of lockdowns, along with the astute support of Atmanirbhar Bharat Mission has placed the economy firmly on the path of recovery.’
Some prominent factors that have helped drive growth
- Agriculture followed by construction and manufacturing.
- The ministry also said that the contact-sensitive services sector also contributed mainly through logistics and communication.
The report also said that globally economic uncertainties continued especially in the months of October and November 2020. The global composite PMI and goods trade activity showed a very little increase and energy and metal prices around the world have moved in different directions.
But India remains optimistic as the ‘global economic uncertainty does not mirror itself in India’.
“High optimism among investors however continues unabated as seen in equity markets the world over. With the further weakening of the US dollar in November, prospects of growth in the rest of the world have become stronger,” said the report.
Further growth is also expected and the report cited various indicators such as
- Overall increase in Rabi coverage that can impact the growth of agricultural output in 2020-21
- Growth in rural wages due to sustained demand for labour arising from an increase in Rabi sowing. This was also additionally propped u by an increase in wages and employment generation under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).
- Boost in rural job creation and incomes due to the additional allocation of Rs 10,000 crore in the latest package for Pradhan Mantri Garib Kalyan Rozgar Yojana.
- Supplementing rural income with increase in minimum support prices for both Kharif and Rabi crops in 2020-21, and progress in rice procurement
The finance ministry report also reiterated that the immediate need is control on Covid-19 with strict adherence to safety protocols till a vaccine is approved.