MUMBAI: For the first time in India’s history, the country has entered into a technical recession in the first half of a fiscal year (Apr-Sept FY21), according to a report by the country’s central bank.
“Asia’s third-largest economy has probably shrunk for the second straight quarter (July-Sept) pushing the country into an unprecedented recession,” said a report released recently by a team led by Michael Patra, deputy governor at the Reserve Bank of India (RBI).
As per the report, India’s gross domestic product is set to contract by 8.6pc in July-Sept after having slumped by around 23.9pc in April-June though the official statistics will be released later this month on Nov 27.
Stating about living in challenging times, the report said, “Lurking around the corner is the third major risk — stress intensifying among households and corporations that has been delayed but not mitigated, and could spill over into the financial sector.”
Cautioning about downside risks and inflation, in particular, following by Covid-19, the report said, “The foremost (risk) is the unrelenting pressure of inflation, with no signs of waning in spite of supply management measures such as the imposition of stock limits on onion traders, imports of potatoes and onions (without fumigation) and a temporary reduction in import duties on pulses.”
The second wave of Covid-19 to the global economy could impact the recent recovery in exports as external demand threatens to collapse as commodity prices indicate, the report said.
However, on an optimistic note, the RBI report said that the Indian economy will break out of contraction of the six months gone by and return to positive growth in the October-December quarter of 2020-21.