While the economy contracted for the second successive quarter, declining 7.5 per cent year-on-year, there was something to cheer about. The GDP grew at 23.2 per cent sequentially signaling a gradual recovery ahead. This also remains the best quarter-on-quarter growth since 1996 when the country started giving out quarterly numbers. Nonetheless, for an apples-to-apples comparison, data prior to June 2011 was spliced by using old GDP series with base year 2004-05 and 1999-00 by the data source CMIE.
Going by this yardstick, the December quarter of the year 1996 was the only other period to have registered a sequential growth of a similar magnitude, at 21.3 per cent. The output had fallen 29.3 per cent in the June quarter compared to the fourth quarter of FY20. In the lockdown infested April-June period, the GDP touched a 22-quarter low of Rs 26.9 lakh crore versus Rs 38 lakh crore in the preceding period.
"The economic growth rate, though, contracted in second quarter but it is better than most estimates. The contraction has reduced considerably if compared quarter-on-quarter. The output for agriculture, manufacturing and electricity in the positive territory is highly encouraging. Q2 is when the Indian government opened up the economy, it benefitted from the pent-up demand," said Nish Bhatt, Founder & CEO, Millwood Kane International, an investment consulting firm.
GDP at constant prices in Q2FY21 was estimated at Rs 33.14 lakh crore, as against Rs 35.84 lakh crore in Q2 of 2019-20, showing a contraction of 7.5 per cent as compared to 4.4 per cent growth in Q2FY20.
"H2 overall is expected to be positive, but mildly positive. So, the economic contraction is gradually slowing down. There is nothing extraordinary about the numbers but there is a clear implied reassurance of a gradual recovery ahead," added Joseph Thomas, Head of Research - Emkay Wealth Management.