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After two consecutive quarters of contraction, India’s Gross Domestic Product (GDP) grew by 0.4 per cent for the October-December quarter (Q3) of current fiscal (FY21). The GDP growth has returned the economy to the pre-pandemic times of positive growth rates. It is also a reflection of a further strengthening of V-shaped recovery that began in Q2 of 2020-21, after a large GDP contraction in Q1 followed one of the most stringent lockdown imposed by Government relative to other countries. However, the GDP for the entire financial year 2020-21 (FY21) is seen contracting (-) 8 per cent.

The second advanced and quarterly estimates of GDP released by the Ministry of Statistics and Programme Implementation (MoSPI) stated that significant recovery in manufacturing and construction augurs well for the support these sectors are expected to provide to growth in FY 2021-22. Real GVA in manufacturing has improved from a contraction of 35.9 per cent in Q1 to a positive growth of 1.6 per cent in Q3 while in construction the recovery has been from a contraction of 49.4 per cent in Q1 to a positive growth of 6.2 per cent in Q3.These sectors are vital to the economy to achieve a growth of 11 per cent or more in 2021-22 as they will be impacted most by the counter cyclical fiscal policy that budgets fiscal deficit at 6.8 per cent of GDP.

Real GVA in Services has also improved from a contraction of 21.4 in Q1 to a negligible contraction of 1.0 percent in Q3 of 2020-21. Real GVA in Agriculture continues to provide vital support to the economy having grown from 3.3 per cent in Q1 to 3.9 per cent in Q3. Meanwhile, Gross Fixed Capital Formation (GFCF) has improved from a contraction of 46.4 per cent in Q1 to a positive growth of 2.6 per cent in Q3, Private Final Consumption Expenditure (PFCE) has recovered from a contraction of 26.2 per cent in Q1 to a much smaller contraction of 2.4 per cent in Q3.