First recession in 24 years but signs of turnaround emerge
The Indian economy is in recession for the first time in 24 years but the latest available figures also suggest the pandemic-induced contraction is easing off, marked by a pick-up in manufacturing.
The economy reported a year-on-year contraction of 7.5 per cent in the three months to September or the second quarter of 2020-21, which on the back of a whopping 23.9 per cent contraction in the first quarter meant two consecutive quarters of contraction.
An economy gets into a recession if it reports a contraction in two consecutive quarters. This is the first time India is doing so since 1996, when the Centre started releasing quarterly GDP (gross domestic product) figures.
The figures for the second quarter were an improvement on a consensus estimate of an 8-9 per cent contraction, a sign of the economy being on the mend after the disastrous first quarter.
Manufacturing surprised analysts by reporting positive growth on an annual basis in the second quarter at 0.6 per cent against a severe 39.3 per cent contraction in the first quarter.
Construction and trade, including hotels and transport, reported contractions of 8.6 per cent and 15.6 per cent, respectively, though these were an improvement from the previous quarter.