Key Points:
- Indian economy has sunk and shrunk because of the ongoing pandemic.
- The Reserve Bank of India showed in its first ever published ‘nowcast,’ which is an estimate based on high-frequency data.
- The Gross Domestic Product, in the quarter ended September, contracted by 8.6%. The economy has drooped about 24% from April to June.
The pandemic has brought in extreme situations for the country. The Covid-19 cases have almost reached the nine million mark and now, the Economy has gone down like never before. The economy of the country is heard to be lower than ever for the second straight quarter as per a team of economists that included Michael Patra who is the Central Bank’s Deputy Governor in-charge of Monetary Policy. This has led to an unprecedented recession of Indian Economy. The Reserve Bank of India showed in its first ever published ‘nowcast,’ which is an estimate based on high-frequency data.
The Gross Domestic Product, in the quarter ended September, contracted by 8.6%. The economy has drooped about 24% from April to June.
A median forecast in a Bloomberg survey of Economists sees a contraction of 10.4% in the July-September quarter. “India has entered a technical recession in the first half of 2020-21 for the first time in its history,” it said.
The team of economists, in the Reserve Bank’s bulletin also wrote that, “there is a severe risk of generalization of price pressures, unanchoring of inflation expectations feeding into a loss of credibility in policy interventions.” They also highlighted risks to global growth from a second wave of coronavirus infections.
The increasing stress among households and corporation that has been delayed but not mitigated which may spill over into the Financial Sector is seen to be as the third major risk to the economy, said the economists.
“The trend of higher than usual household financial savings can persist for some time till the pandemic recedes and consumption levels get normalized,” the RBI’s Sanjay Kumar Hansda, Anupam Prakash and Anand Prakash Ekka wrote.
The trio added that once the economic activities revive and the virus curve flattens, all this will be tapered.
“We live in challenging times,” the RBI economist’s team concluded.
