GDP set to shrink much less in Q2 – Times of India

NEW DELHI: India’s economy is expected to post a smart recovery in the July-September quarter and the contraction witnessed in the June quarter will narrow significantly due to the impact of the festival demand and lifting of the strict lockdown in June.
Economists estimate the contraction in the September quarter to be in the range of 5% to 9.9% — a sharp narrowing from the record decline of 23.9% in the June quarter. According to an RBI report, the economy may have entered into a technical recession for the first time with two successive quarters of contraction. The central bank expects the September quarter to post a contraction of 8.6%. However, a spate of economic indicators in the past few weeks have pointed to a recovery gathering pace and there are expectations that the third or fourth quarter may post a small positive growth.
The data for the July-September quarter will be released by the National Statistical Office (NSO) on Friday (November 27), according to the advance release calendar for economic data.

“It will be significantly better than the first quarter. My estimate is that it will be a contraction of about 5% in the second quarter. In the first two months of the first quarter, production had stopped. But since the lockdown was lifted, there has been a restart,” said Pronab Sen, former chief statistician of India. But he added that even the 5% contraction was not enough and the full year (2020-21) would witness a decline of 12%.
Care Ratings estimates the contraction in the July-September period, the second quarter of the country’s 2020-21 fiscal year, to be 9.9%, while another ratings agency ICRA estimates it to be 9.5%.
“Growth is expected to be positive in agriculture, forestry, financial services, real estate and professional services. It must be remembered that in case of agriculture, there is less of the main harvest which enters the calculation as kharif cutting starts in late September and carries on till December. Hence the good kharif crop expectation will show in the Q3 numbers. Contribution from allied activities is likely to be higher this quarter,” Care Ratings said in a note.
“While we believe that overall economic contraction continued in the second quarter (July-September) of this fiscal, in all likelihood, it was less severe than in the first, and then expected. This creates an upside to our second quarter gross domestic product (GDP) forecast of -12%,” said Dharmakirti Joshi, chief economist at ratings agency Crisil.