PremiumIndia’s gross domestic product (GDP) expanded 0.4% from a year earlier in the October-December quarter, or the third quarter of 2020-21, according to data released by the statistics ministry on Friday. With this, our economy has emerged from a technical recession that it tumbled into when its output plummeted by 24.4% and 7.3%, respectively, in the first and second quarters. Agriculture and construction showed buoyancy, with a 3.9% and 6.2% expansion, respectively. This is heartening, given the ongoing protests by farmers, and also suggests that a large group of workers displaced by the lockdown has returned to urban work. However, mining proved a drag, with a 5.9% contraction in output, while a 7.7% contraction in services such as trade, hotels and transport reflects the poor state of travel and tourism.
The break above zero validates the broader view that our economy is normalizing as commercial activity recovers. Indeed, other indicators had also signalled that the worst is past. The robust purchasing managers’ index readings of recent months, for instance; or strong car sales, for that matter. They point to a revival in consumer demand in some markets, though a release of sales repressed by the first two quarters' lockdown did not take private consumption into positive territory overall. Production lines since then have been restored, and the third quarter saw the corona curve slide after its mid-September peak. The economy is expected to get a further boost from next year's budget, as the Centre loosens its fiscal strings on the promise of spending heavily on infrastructure and other productive investments. If plans work out, these should help the economy gain momentum.
Of course, the recent surge in infections in some states poses risks. Hopefully, though, the preventive action taken by authorities would ensure that the infection’s resurgence is contained fast.
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