Chief Economic Advisor KV Subramanian says GDP estimates more encouraging than anticipated
Nov 27, 2020
New Delhi [India], November 27 : With the contraction of the Indian GDP by 7.5 per cent in July to September quarter (Q2 FY21), Chief Economic Advisor (CEA) KV Subramanian on Friday said GDP estimates are more encouraging than what was anticipated though he urged for caution in the coming months.
"The GDP estimates are more encouraging than what was anticipated by most commentators. Uncertainty in the economic outlook is due to the COVID-19 pandemic and therefore I would urge caution especially given winter months," Subramanian said.
Though the contraction of 7.5 per cent is a rebound from the earlier quarter, when the economy had contracted by 23.9 per cent in the April to June quarter (Q1 FY21), the current contraction has caused the Indian economy to hit technical recession for the first time.
"Indian economy had picked up momentum by February 2020, only to be halted by COVID-19 outbreak. The Q1-GDP contraction was primarily due to the stringent lockdown," CEA said.
"GDP at Constant (2011-12) Prices in Q2 of 2020-21 is estimated at Rs 33.14 lakh crore, as against Rs 35.84 lakh crore in Q2 of 2019-20, showing a contraction of 7.5 per cent as compared to 4.4 per cent growth in Q2 2019-20," said the Ministry of Statistics and Programme Implementation in a statement.
"Quarterly GVA at Basic Prices at Constant (2011-12) Prices for Q2 of 2020-21 is estimated at Rs 30.49 lakh crore, as against Rs 32.78 lakh crore in Q2 of 2019-20, showing a contraction of 7 per cent," it added.
Subramaniam mentioned that a V-shaped recovery in growth could be spotted across sectors with "capital and infrastructure sectors especially encouraging".
"There is a V-shaped growth pattern in all major sectors today. Consumer durables, capital and infrastructure look very encouraging. Food Inflation is expected to soften in Q3," he said.
The ministry statement said during the quarter trade, hotels, transport and communication saw a dip of -15.6 per cent while public administration, defence and other services by -12.2 per cent. The financial, real estate and professional services sector contracted by 8.1 per cent and construction by 8.6 per cent.
Some sectors have bounced back with resumption of economic activities. The electricity, gas, water supply and other utility services have shown a growth of 4.4 per cent; agriculture, forestry and fishing sector at 3.4 per cent and manufacturing sector showed a marginal growth of 0.6 per cent.
Subramaniam said: "Corporate sector is back on recovery track from Q2 2020-21... growth in operating profits are similar to 2 years back."
Even improvement in steel production and consumption suggest revival of construction activity.
He said upbeat digital retail transactions with UPI payments are at new highs.
The CEA also assured government is committed to provide all fiscal support.
