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GDP contracts by 7.5% in the second quarter of the year 2021

Last updated: 28 November 2020


Q2 GDP at - 7.5% buttresses recovery as captured by several high-frequency indicators. Economic impact is primarily due to #COVID19, good news is falling daily cases are due to lower transmission & not due to lower testing. To sustain economic recovery, caution must continue - FM

Covid has picked in mid September

FM Says:

  • High PMI Indices for Manufacturing and Services with manufacturing PMI at a decadal high

PMI Indices show optimism

  • Broad-based recovery is underway

FM Says:

  • Index of Industrial Production enters positive territory 
  • Index of 8-core industries regains previous year levels in September

Industrial Production

V-shaped recovery in use-based Industries especially in consumer goods, especially consumer durables, and investment, especially capital and infrastructure goods suggest a strong revival of both consumption and investment, which together account for about 90% of India’s GDP – FM

V-Shaped Recovery in User Based Industries

Corporate sector back on track in Q2 2020-21 after two quarters of contraction, level of operating profits similar to that in Sep 2018 - FM

Corporate Sector Bank on recovery rate
 
FM Says:

  • Steel production and consumption gathers momentum signalling revival of construction activity.
  •  Power consumption and E-way bills clocked double digit growth in October suggesting buoyancy in industrial and commercial activities 

Power Consumption & Eway Bills

FM Says:

  • Recovery ignites optimism, but a cautious optimism 
  • Sustainability of the recovery critically depends on keeping the pandemic in control

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