India’s economy is likely to enter a recessionary phase for the first time ever in the second quarter (July-September) of the current financial year, with the Gross Domestic Product expected to contract by 8.6%, the Reserve Bank of India said in a bulletin released on Wednesday.
In economics, when the GDP growth rate is negative for two consecutive quarters or more, it is termed recession. ‘Nowcasting’ is the prediction of the present or the very near future of the state of the economy.
The pandemic-induced lockdowns had led to a steep contraction of 23.9 per cent in the GDP for the April-June quarter as compared to the same period a year ago.
“India has entered a technical recession in the first half of 2020-21 for the first time in its history with Q2 2020-21 likely to record the second successive quarter of GDP contraction,” as per the article titled ‘Economic Activity Index’, authored by Pankaj Kumar of the Monetary Policy Department.
It, however, added that the contraction is “ebbing with gradual normalisation in activities and expected to be short-lived.”
