Home >Politics >Policy >Q3 GDP highlights: India's GDP turns positive in December quarter, grows 0.4%

After contracting for two straight quarters, Indian economy witnessed marginal growth of in the October-December quarter. India's gross domestic product (GDP) grew 0.4% year-on-year, official data released by the National Statistics Office showed on Friday. Indian economy had grown at the rate of 4.7% in the same quarter last year. The recovery is due to astute handling of the lockdown and a calibrated fiscal stimulus, the government said.

India had slipped into a technical recession during July-September when GDP fell for two successive quarters. In the July-September quarter, India's GDP contracted 7.5% year-on-year. The economy shrank 23.9% year-on-year in the April-June quarter in the wake of coronavirus outbreak and nationwide lockdown to prevent the virus. NSO revised GDP growth for June and September quarters to -24.4% and 7.3% respectively against earlier estimates of -23.9% and -7.5%.

"Real GDP has shown marked improvement over the quarters of the Financial Year (FY) with growth rates of -24.4%, -7.3% and 0.4% for Q1, Q2 and Q3 respectively," Ministry of Statistics & Programme Implementation said.

Nominal GDP has also seen similar improvement over the quarters of the FY with the growth rates of -22.2%, -4.2% and 5.3% for Q1, Q2 and Q3 respectively, it added.

Gross value added (GVA) grew 1% year-on-year in the quarter under review. The manufacturing and construction sector saw significant recovery in the December quarter. Real Gross value added (GVA) in manufacturing improved from a contraction of 35.9% in Q1 to a positive growth of 1.6% in Q3. In construction sector, the recovery was contraction of 49.4% in Q1 to a growth of 6.2% in Q3. Real GVA in services has improved from a contraction of 21.4% in Q1 to a contraction of 1.0% in Q3 of 2020-21.Real GVA in agriculture grew from 3.3% in Q1 to 3.9% in Q3.

"GDP at Constant (2011-12) Prices in Q3 of 2020-21 is estimated at 36.22 lakh crore, as against 36.08 lakh crore in Q3 of 2019-20, showing a growth of 0.4 per cent," NSO said.

"The 0.4% year-on-year growth in real GDP is broadly in line with street expectation and is significantly stronger than the GDP prints witnessed during the previous two quarters. The current print will likely further boost the expectation of a 7-8% year-on-year contraction in real GDP during FY21," said Siddhartha Sanyal, chief economist and head of research, Bandhan Bank.

"Furthermore, while expectations of GDP growth during FY22 remains strong, partly reflecting a markedly favourable base, one needs to note that the path for sequential growth can still be uneven and uncertain," he added.

Commenting on the growth, Sakshi Gupta, senior economist, HDFC Bank said, "Q3 GDP was slightly lower than expectations, albeit showed that the economy did move into the green. Going ahead, we are likely to see a continuation of a K-shaped recovery with some sectors growing faster than others."

"We expect growth to print at 1.5% in Q4 and -7.5% for the whole year FY21. We expect GDP for FY22 at 11.5%. We expect the economy to reach pre-pandemic output levels by the end of the calendar year 2021," she added.

Real GDP is expected to contract by 8.0% in 2020-21 as compared to 4.0% growth in 2019-20 as per first revised estimates, ministry said.

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