India's GDP grows at 0.4% after two quarterly declines

Data released by the National Statistical Office (NSO) showed that India's gross domestic product (GDP) increased 0.4 percent in the three months ended December 2020.

In the last quarter of 2020, India is among the few major economies to post growth, ever after contracting in two consecutive quarters, reports NDTV. 

But, given the inverse relationship between economic growth and the decline in Covid-19 infections, the recent revival in Covid19 cases in select pockets of the country is a cause for concern.

Because of the Covid-19 virus outbreak, India's quarterly GDP growth slid by record margins for two consecutive quarters.

In the midst of the pandemic-led national lockdown, the GDP contracted by a huge 23.9% in the June quarter and by 7.5% during the September quarter.

Indeed, in the July-September period, India slipped into a technical recession as its domestic product (GDP) dropped for two successive quarters.

The median forecast from a survey of 58 economists by Reuters this week had predicted the gross domestic product to grow 0.5 per cent year-on-year in the December quarter

Meanwhile, in its Monetary Policy Review presented on February 5, the Reserve Bank of India has projected a GDP growth of 10.5 per cent in financial year 2021-22.

Economists have raised their forecasts for the current and next fiscal year, expecting a pick-up in government spending, consumer demand and resumption of most economic activities.

Moody's revised its forecast to a 7 per cent contraction for the current fiscal year, ending in March, from an earlier estimate of a 10 per cent contraction. It predicted 13.7 per cent growth for next fiscal year, helped by resumption of economic activities.

And India Ratings and Research (Ind-Ra) has suggested that the gross domestic product (GDP) growth will bounce back to 10.4 per cent year on year (y-o-y) in the next fiscal year, primarily driven by the base effect.