India Inc on Friday said the recouping of the country's economy to a positive trajectory in the third quarter is a promising sign as it portends the end of the pandemic-induced recessionary phase seen in the first-half of the fiscal year. Industry bodies expressed confidence that the GDP will improve further in the coming months on the back of positive growth stimuli emanating from the Union Budget and initiatives like the Production Linked Incentive scheme unveiled by the government.
After contracting for two quarters in a row, the Indian economy grew by 0.4 per cent in the October-December quarter amid coronavirus pandemic, official data showed on Friday. The gross domestic product (GDP) had expanded by 3.3 per cent in the corresponding period of 2019-20, according to the data released by the National Statistical Office (NSO).
8 takeaways from Q3 GDP data as economy snaps out of recession
Chandrajit Banerjee, Director General, CII, said that recouping of GDP to the positive territory by posting a growth of 0.4 per cent in the third quarter is a promising sign as it portends the end of the pandemic-induced recessionary phase seen in the first-half of the year". He observed that one of highlights of the data is the positive momentum seen in investment demand as it grew by 2.6 per cent in the third quarter after being in doldrums for several quarters now.
"This bears testimony to the unrelenting efforts of the government to go all-out to revive investments under the ambit of the various measures which formed a part of the Aatmanirbhar Bharat package," Banerjee said. "Going forward, we are confident that the growth stimuli available from the Union Budget and the additional measures including the PLI will lead to a sturdy growth path over the recovery horizon," he added.
The GDP growth of 0.4 per cent for the third quarter of FY21 is no surprise, but it marks a significant turnaround into the Indian economy returning to a positive trajectory after sharp drops in the first two quarters,even as the war against COVID-19 is continuing, said Assocham Secretary General Deepak Sood. According to him, the last quarter of the current fiscal should be far better.
"As pointed out by Assocham in its earlier projection, the real recovery would be seen in the FY22 , beginning with the first quarter and then picking up pace later," Sood said. In its second advance estimates of national accounts, the NSO has projected 8 per cent contraction in 2020-21. In its first advance estimates released in January, it had projected a contraction of 7.7 per cent for the current fiscal as against a growth of four per cent in 2019-20.
The economy had shrunk by an unprecedented 24.4 per cent in the first quarter this fiscal following the coronavirus pandemic and resultant lockdowns. In the second quarter, the GDP declined 7.3 per cent due to a perk up in economic activities. China's economy grew by 6.5 per cent in October-December 2020, faster than the 4.9 per cent growth in July-September 2020.