MUMBAI: India’s economy contracted 7.5% between July and September, performing the poorest among major advanced and emerging economies and entering a technical recession for the first time since independence, official data showed Friday.
Although the figures were an improvement on the record 23.9% contraction recorded last quarter, they indicate that Asia’s third-largest economy is in for a tough fight as it attempts to revive demand and create jobs.
The two successive quarters of contraction mean that the country has now entered a “technical recession” for the first time since 1947.
After virus-led lockdowns ravaged the globe, the growth recorded by major economies including the US, Japan and Germany during the quarter ending on Sept 30 raised expectations that India would also enjoy a revival.
But, while consumer businesses saw a boost due to increased spending in the run-up to the October-November festive season, hopes of a broader recovery were dashed, with the construction and hospitality sectors taking a hit.
New Delhi has struggled to kickstart an economy that is expected to shrink 9.5% this year, according to estimates released by India’s central bank governor Shaktikanta Das last month.
The International Monetary Fund has meanwhile predicted that India’s economy would contract by 10.3% this year, the biggest slump for any major emerging economy and the worst since independence.
A report by Oxford Economics released earlier this month said that India would be the worst-affected economy even after the pandemic eases, stating that annual output would be 12% below pre-virus levels through 2025.