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Q2 GDP data: Manufacturing enters positive zone, construction continues to see contraction

Manufacturing saw a growth of 0.6 percent in July-September of 2020-21, against a contraction of 0.6 percent in the same period a year ago, while construction saw a contraction of 8.6 percent, against a growth of 2.6 percent in the same period a year ago

November 28, 2020 / 12:04 AM IST

Manufacturing entered positive terrain with a growth of 0.6 percent in July-September of 2020-21, against a contraction of 0.6 percent in the same period a year ago, according to the gross domestic product (GDP) data released by the National Statistics Office on November 27.

"While manufacturing volumes had continued to contract, the GVA of this sector posted a marginal 0.6 percent growth in Q2 FY2021, on the back of aggressive cost-cutting measures, a pared down wage bill and benign raw material costs, said Aditi Nayar, principal economist, ICRA.

Experts and economists have pointed out that as it was expected that a combination of pent up and festive demand would play a role in pushing up demand, manufacturing sector geared itself up by building inventory through the months of August and September.

"Yet this manufacturing growth needs to be taken with a pinch of salt, because it is on a low base as second quarter of FY20 GDP which had witnessed a growth of negative 0.6 percent," Sunil Kumar Sinha, principal economist and director public finance, India Ratings & Research said.