India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 percent and held out hopes for further improvement on consumer demand bouncing back. The gross domestic product (GDP) had contracted by a record 23.9 percent in the first quarter of 2020-21 fiscal (April 2020 to March 2021) as the coronavirus lockdown pummelled economic activity.
The second straight quarter of contraction pushed India to its first technical recession. The GDP contraction of 7.5 percent in July-September compared with a growth of 4.4 percent in the same quarter last year, according to data released by the statistics ministry on Friday.
With the gradual opening up from June, the economy picked up momentum. Manufacturing clocked a surprise 0.6 percent growth in July-September after it had shrunk by a massive 39 percent in the preceding quarter. Continuing its good showing, the agriculture sector grew by 3.4 percent, while electricity and gas expanded 4.4 percent.
Financial and real estate services shrank 8.1 percent in the second quarter of FY21 from a year ago, while trade, hotels, transport and communication declined 15.6 percent. The construction sector, which is the second-largest employer in the economy, contracted only 8.6 percent in Q2 versus (-) 50 percent in Q1. Public spending was down 12 percent.
To discuss the GDP data fineprint, CNBC-TV18's Latha Venkatesh spoke to former chief statistician Pronab Sen; Sudipto Mundle, former member of the National Statistical Commission and Abhishek Upadhyay, senior economist at ICICI Securities.Watch video for more.