NSO: India’s GDP Grows 0.4% in Q3

According to the data from the National Statistical Office (NSO), the Indian economy resurfaced to growth territory in the 3rd quarter of the financial year 2020-21, clocking a rise of 0.4% in the gross domestic product (GDP).

Key Points

• As per the revised data, GDP had decreased in the first two quarters by 24.4% and 7.3% due to the COVID-19 pandemic and lockdowns.
• The NSO has also revised its advanced national income estimates for the fiscal year 2021 to project an 8% decline in GDP, compared with the 4% growth seen in FY20.
• Before this, NSO had estimated a decrease of 7.7% for FY21.
• The Finance Ministry has regarded the 0.4% real GDP growth in Q3 as a return to the normal times (pre-pandemic) of positive growth rates.
• This also shows that the V-shaped recovery that began in Q2 has further strengthened.
• The farm sector of the country has remained resilient, clocking a 3.9% growth in Gross Value Added (GVA) to the economy in the October-to-December quarter, after an increase of 3.3% and 3% in the first two quarters, respectively.
• For FY21, only two sectors are expected to record positive growth in GVA as per NSO. These sectors are agriculture (3%) and electricity, gas, water & other utilities (1.8%).
• Overall GVA is expected to decrease by 6.5% in the year, led by an 18% dip in hotels, trade, and other services, around a 9% fall in mining and manufacturing GVA, and a 10.3% decline in construction.
• In the third quarter, real estate, manufacturing, construction, and financial and professional services staged a return to growth for the first time in the year after two bad quarters.
• Manufacturing GVA grew by 1.6% after dipping 35.9% and 1.5% in the first two quarters.
• Construction saw the sharpest recovery with GVA rising 6% after falling 49.4% and 7.2%.
• Services including hotels, trade, transport, and communication are still in problem, with GVA declining 7.7%. However, it was better than the -47.6% and the -15.3% reading in Q1 and Q2.

As per the Finance Ministry, the resurgence in manufacturing and construction is expected to drive growth in FY22.