COVID impact worse than estimated; Q1 GDP revised to -24.4% from -23.9%

Announcing the Gross Domestic Product (GDP) numbers for the third quarter of FY21, Centre revised those for the first two quarters. As per the revised estimates released on Friday, Indian economy saw (-)24.4 per cent growth in the June quarter of FY21, as opposed to the earlier figure of (-)23.9 per cent.

Indian economy fared marginally better than earlier estimated in the September quarter, though, as per the revised GDP estimates. The Ministry of Statistics and Programme Implementation pegged GDP de-growth at 7.3 per cent for the second quarter of this fiscal, as opposed to 7.5 per cent contraction estimated earlier.

As per government data, Indian economy grew at 0.4 per cent during the quarter ended December 31, 2020, as expected by analysts.

ALSO READ: Q3 GDP grew because of base revision

The growth came after contraction in the first two quarters as the country entered one of the strictest and longest lockdowns in the world to check the spread of coronavirus. While the economy is steadily getting back on track, with government expenditure rising to fuel recovery, consumer confidence is still trailing. This was reflected in the GDP figures as well.

"The sharp pickup in the capital spending of the Government of India has spurred the growth in gross fixed capital formation in Q3 FY2021, even as state government capital spending contracted, and private sector participation remained uneven and subdued," noted Aditi Nayar, Principal Economist, ICRA.

"Despite the pickup during the festive season, private final consumption expenditure continued to contract in Q3 FY2021, and trailed the performance of investment and government spending. This is in sync with the muted improvement in consumer sentiment revealed by the RBI's latest survey, with the current situation index continuing to trail the pre-pandemic levels by a wide margin in January 2021," she further added.

ALSO READ: India steps out of recession - GDP grows 0.4% in Dec quarter