GDP, though still in negative zone, shows green shoots
The country's GDP for second quarter of the current fiscal, ending 30 September 2020 has witnessed a contraction at -7.50 per cent. Given that Indian economy had already entered the recession zone during pre-pandemic era that was further worsened due to the arrival of prolonged Covid-19, the current GDP number fall on the expected lines. Still, the contraction in GDP at -7.50 per cent is an improvement over -23.9 per cent registered in the preceding quarter and also it has beaten the analysts' forecast of being in the range of 8-10 per cent point with pleasant surprise. Of course, it could become possible due to green shoots being visible from sectors like agriculture (3.4 per cent) and manufacturing (0.60 per cent).
However, sectors like construction, mining and services continue to be in the negative zones of growth.
On its part, the government has been trying hard to bring back the country's economy on the right track: Announcement of a host of stimulus packages in forms like waiver on compound interest for loan moratorium period, extension of deadlines for the filing of income tax returns and performance-linked incentive (PLI) for SMEs. However, these measures are mild in nature and have acted as mere a balm, if not panacea. Yet, when the tax collections are abysmally low and government's expenditure was staggering on the firefighting act, one can't hope any bigger booster in the form of quantitative easing.
Added to it were some of the harsh measures in which the government not only postponed the ritual hike in dearness allowances to its employees and putting an iron curtain on all fresh recruitments.
All these will have cascading impact on the economy in days to come. While we may see some fireworks at the stock exchanges when the market reopens on Tuesday, the focus will be on the outcome of the forthcoming meeting of the monetary policy committee (MPC) of RBI which reviews the annual policy rates in the country later during the week.
The silver lining that the vaccine arrival is not far off also shows a ray of hope in this testing times. In fact, Goldman Sachs has rightly pointed out a V (vaccine) shaped recovery in its recent report.
In a nutshell, we may trudge the economic growth, no matter if the pace of growth is slow.