India entered an unprecedented recession with the economy contracting in the three months through September due to the lingering effects of lockdowns to contain the Covid-19 outbreak.
Gross domestic product declined 7.5% last quarter from a year ago, the Statistics Ministry said in a report Friday. That compares with a forecast for an 8.2% drop in a Bloomberg survey of economists, and follows a record 24% contraction the previous quarter.
* Financial and real estate services — among the biggest component of India’s dominant services sector — shrank 8.1% last quarter from a year ago; trade, hotels, transport and communication declined 15.6%, while mining output fell 9.1%, and construction dropped 8.6%
* Manufacturing rose 0.6%, electricity and gas expanded 4.4% and agriculture grew 3.4%
* Economic activity suffered after Prime Minister Narendra Modi imposed one of the world’s strictest coronavirus lockdowns in March, sapping demand for non-essential goods and services. Despite the measures to stem the pandemic, the country is now home to the second-highest Covid-19 infections after the U.S. at 9.3 million cases
* The second straight decline in GDP pushes Asia’s third-largest economy into its first technical recession in records going back to 1996, when the nation first started reporting quarterly GDP numbers
* Sovereign bonds declined Friday, with the yield on benchmark 10-year bonds rising by 4 basis points to 5.9%, while the rupee declined 0.2% to 74.04 a dollar
* The central bank and government have each worked to support the economy, with total stimulus reaching around 30 trillion rupees ($405 billion), or 15% of GDP. The Reserve Bank of India, which has cut interest rates by 115 basis points this year, is due to review monetary policy next week, with the stance expected to remain accommodative for the near future
* The stimulus, along with festival season demand, has helped spur activity in the economy, with a slew of indicators from car sales to services sector activity edging higher last month. Alternative data too has signaled robust demand