In yet another setback for the struggling Indian economy, the Reserve Bank of India has projected that the economy is likely to enter into a technical recession for the first time in history at the end of the first half of 2020-21.
India has already witnessed a worrying decline of 23.9 per cent in the GDP for April-June quarter which was a result of nationwide lockdown induced due to the coronavirus pandemic.
However, before the pandemic too, the World Bank had projected India’s economy to grow a mere 4.5 per cent.
The RBI also said that the NSO estimates for the second quarter expected at the end of November 2020 will formally bear out the extent of improvement that occurred in the quarter gone by.
This decline in economy is an eyebrow-raiser for the nation as in the economic terms, when the GDP growth rate is negative for two consecutive quarters or more, it is termed recession.
Perhaps, the Reserve Bank has said that the economy will break out of contraction of the six months gone by and return to positive growth in the October-December quarter of 2020-21.
“With the momentum of September having been sustained, there is optimism that the revival of economic activity is stronger than the mere satiation of pent-up demand released by unlocks and the rebuilding of inventories. If this upturn is sustained in the ensuing two months, there is a strong likelihood that the Indian economy will break out of contraction of the six months gone by and return to positive growth in the third quarter (Q3) of 2020-21,” it said.