India has been witnessing an economic slowdown for a couple of years now, and it is considered that the country is currently undergoing a recession. Nevertheless, it has been officially that India is currently in a technical recession as the government announces the July to September Q2 GDP figures. Although, the country is awaiting that the economy would revive, and is on much better footing as compared to the 24 percent decline in the first quarter (April to June).
The official announcement of Q2 figures is expected and this is the first time in history that India plunges into recession. The declining economy has been estimated by various agencies anywhere from 8.6 percent to 11 percent or even more. Thus, it is noted that the country's economy would be declining by 9.5 percent according to the RBI analysis. An article put up on RBI's monthly bulletin has been released that highlights that the Q2 drop at 8.6 percent.
"India has entered a technical recession in the first half of 2020-21 for the first time in its history with Q2 likely to record the second successive quarter of GDP contraction,” says Pankaj Kumar, Monetary Policy Department, RBI.
However, he has also assured that the recession would be short-lived. Several agencies have anticipated different figures, all around minus 10 percent, for the contraction of the economy in Q2. While Bank of America's view is the most hopeful at -7.5, the National Council of Applied Economic Research (NCAER) being cautious at -12.7. Other major estimates range from State Bank of India's -10.7, ICRA's -9.5, and Barclay's -8.5.
The country's economy was in a 'slowdown' and not recession through the period of 2018 and '19, dropping from a growth rate of 5.2 to about three percent in the January-March quarter of this year, just as COVID cracked. The nationwide lockdown announced at the end of March and remained in place in various forms into June ensured that the first quarter of the financial year 2020-21 observed the GDP falling to 23.9 percent.
Although, it may not be enough to save India from the inevitable tag of 'recession'. Furthermore, it is also expected to manage the worst among all major global economies as far as recovery goes.