The contraction in India's real GDP can narrow down to just 1-2 per cent, said a report by Motilal Oswal Financial Services.
Accordingly, the in-house Economic Activity Index (EAI) for India's real GVA (EAI-GVA) grew by 4.8 per cent YoY in October 2020, marking the second consecutive month of growth.
"This is the first month in a year when non-farm activities (both industrial and services) grew faster than the farm sector," Motilal Oswal Financial Services said in a report.
The GVA includes taxes, but excludes subsidies.
Last month, the NSO data showed that on a YoY basis, Q2 GVA for 2020-21 from the agriculture, forestry and fishing sector inched lower to 3.4 per cent growth, against 3.5 per cent in the same quarter of 2019-20.
However, the EAI-GDP, continued to contract for the eighth consecutive month in October 2020 and that too faster than the previous month.
"While personal consumption expenditure (PCE) continued to contract in double-digits for the seventh consecutive month, total investments declined 5 per cent the slowest fall in eight months."
"Excluding government spending, EAI-GDP contracted 7.6 per cent YoY in Oct'20 versus a fall of 5.1 per cent YoY in Sep'20."
According to the report, overall EAI-GVA continues to show an improvement in economic activity, while demand measures continue to lag.
"Based on a few indicators available for Nov'20 - power generation, manufacturing PMI, e-way registrations, etc., growth seems to have cooled off last month."
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"If so, it suggests that the growth peaked out in Oct'20 (as per our expectations) and is likely to moderate in coming months. Real GDP could contract again in 3QFY21 before posting a growth in 4QFY21. The second wave of the Covid-19 pandemic, however, remains a valid risk."
Recent data showed that even though India's economic recovery accelerated in Q2FY21 from the lows of the pandemic-induced lockdown, the country, for the very first time since Independence, entered into a technical recession.
The recent data furnished by National Statistical Office (NSO) showed that the Q2FY21 GDP, on a year-on-year basis, contracted by (-) 7.5 per cent from (-) 23.9 per cent in the preceding quarter.
Though not comparable, the GDP had grown by 4.4 per cent in the corresponding quarter of FY2019-20.
SOURCE: IANS