India’s Q2 GDP contracts by 7.5 %, after record slump 23.9% in last quarter
New Delhi, Nov 27: India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 per cent and held out hopes for further improvement on consumer demand bouncing back.
The gross domestic product (GDP) had contracted by a record 23.9 per cent in the first quarter of 2020-21 fiscal (April 2020 to March 2021) as the coronavirus lockdown pummelled economic activity.
The second straight quarter of contraction pushed India to its first technical recession.
The GDP contraction of 7.5 per cent in July-September compared with a growth of 4.4 per cent in the same quarter last year, according to data released by the statistics ministry on Friday.
With the gradual opening up from June, the economy picked up momentum. Manufacturing clocked a surprise 0.6 per cent growth in July-September after it had shrunk by a massive 39 per cent in the preceding quarter.
Continuing its good showing, the agriculture sector grew by 3.4 per cent, while electricity and gas expanded 4.4 per cent.
Financial and real estate services shrank 8.1 per cent in the second quarter of FY21 from a year ago, while trade, hotels, transport and communication declined 15.6 per cent.
The construction sector, which is the second-largest employer in the economy, contracted only 8.6 per cent in Q2 versus (-) 50 per cent in Q1.
Public spending was down 12 per cent.
Analysts and economists, who have projected the economy shrinking for the full fiscal, had expected a wider contraction in Q2.
China's economy grew by 4.9 per cent in July-September this year, faster than the 3.2 per cent growth in April-June 2020.
Chief Economic Adviser Krishnamurthy Subramanian said the GDP numbers were "quite encouraging" given the pandemic and compared with the previous quarter's performance.
Giving outlook for the near future, he said, "We should be cautiously optimistic and the caution is warranted because the economic impact is primarily due to the pandemic."
Rumki Majumdar, economist, Deloitte India said recent high-frequency data possibly suggest a quicker rebound ahead.
"The possibility of a release of several highly effective vaccines soon gives us hope that there is an end date to the pandemic, even if it may not be immediate," Majumdar said.
Stating that the numbers are surely not as gloomy as was being anticipated, Mayur Dwivedi of Religare Enterprises said it now remains to be seen whether this momentum is sustained in the remaining two quarters of FY21.
In the first half, India's GDP contracted by 15.7 per cent compared to a growth of 4.8 per cent in the same period last fiscal.
Though the contraction in July-September pushed India into its first technical recession, based on records going back to 1996, a sharp recovery held out hopes for the economy turning around before the end of the fiscal year.
Analysts said the recovery was 'V' shaped.
Reserve Bank of India (RBI) Governor Shaktikanta Das had on Thursday stated that the recovery from the lockdown has been stronger than expected and the economy could show growth in the fourth quarter.
Post Q2, there has been a pick-up in consumer demand for autos, non-durables and rail freight during the festival season as prospects grew for COVID-19 vaccines to be launched early next year.
But there are downside risks as some states reimposed curbs to fight a second wave of infections, which could possibly slow the pace of recovery in the next two or three months, as well as heightening the risk of inflation.
India's tally of infections has crossed 93 lakh -- the second-highest globally after the US -- with more than 1.35 lakh deaths.
The improvement in the economy came ahead of next week's interest rate decision by the RBI.
"GDP at Constant (2011-12) Prices in Q2 of 2020-21 is 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 percent as compared to 4.4 percent growth in Q2 2019-20," the National Statistical Office (NSO) said in a statement.
"With a view to contain the spread of the Covid-19 pandemic, restrictions were imposed on the economic activities not deemed essential during Q1.
"Though the restrictions have been gradually lifted, there has been an impact on economic activities. In these circumstances, some other data sources such as GST, interactions with professional bodies, etc. were also referred to for corroborative evidence and these were clearly limited," it added.
Most rating agencies had projected that the fall in India's GDP for the second quarter of 2020-21 would be arrested to single digits.
Niti Aayog Vice Chairman Rajiv Kumar said the economic recovery was a 'pleasant surprise'.
"Manufacturing shows a positive growth which is the confirmation of a rebound of demand led recovery," he tweeted.
Vedanta Chairman Anil Agarwal said the Q2 GDP numbers show that economy is recovering. "Government's efforts on stimulus and reform are showing results. Hopefully, we will have positive growth in H2 FY21 and double digit growth in FY22."
India Ratings and Research said much would depend on the sustainability of the consumption demand seen in October.
"If it sustains then a faster recovery is possible. But with rising COVID-19 cases and some states hinting that they may have to impose some kind of lockdown could be a spoiler in the growth recovery process," it said.
Separate official data showed that April-October 2020 fiscal deficit at Rs 9.53 lakh crore was 119.7 per cent of the FY21 target.
Fiscal deficit has been budgeted at Rs 7.96 lakh crore for FY21.
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MP HC sets up judicial commission to probe water contamination in Indore
Indore (PTI): The Indore bench of Madhya Pradesh High Court on Tuesday set up a commission of inquiry comprising a former HC judge to probe the issue of water contamination in city's Bhagirathpura, saying the matter requires probe by an independent, credible authority and "urgent judicial scrutiny".
It also directed the commission to submit an interim report after four weeks from the date of commencement of proceedings.
A division bench of Justices Vijay Kumar Shukla and Alok Awasthi constituted the commission while hearing several public interest litigations (PILs) filed simultaneously regarding the deaths of several people in Bhagirathpura due to the consumption of contaminated water.
The HC reserved the order after hearing all the parties during the day, and released it late at night.
The state government on Tuesday told the HC that the deaths of 16 people in Indore's Bhagirathpura area was possibly linked to a month-long outbreak of vomiting and diarrhoea caused by contaminated drinking water.
The government presented an audit report of 23 deaths from the current gastroenteritis epidemic in Bhagirathpura before the bench, suggesting that 16 of these fatalities may have been linked to the outbreak of vomiting and diarrhoea caused by contaminated drinking water.
The report, prepared by a committee of five experts from the city's Government Mahatma Gandhi Memorial Medical College, stated that the deaths of four people in Bhagirathpura were unrelated to the outbreak, while no conclusion could be reached regarding the cause of death of three other people in the area.
During the hearing, the high court sought to know from the state government the scientific basis behind its report.
The division bench also expressed surprise at the state government's use of the term "verbal autopsy" in relation to the report, sarcastically stating that it had heard the term for the first time.
The HC expressed concern over the Bhagirathpura case, stating that the situation was "alarming," and noted that cases of people falling ill due to contaminated drinking water have also been reported in Mhow, near Indore.
In its order, the HC said the serious issue concerning contamination of the drinking water supply in Bhagirathpura area allegedly resulted in widespread health hazards to residents, including children and elderly persons.
According to the petitioners and media reports, death toll is about 30 till today, but the report depicts only 16 without any basis or record, it said.
It is averred that sewage mixing, leakage in the pipeline, and failure of civic authorities to maintain potable water standards have led to the outbreak of water-borne diseases. Photographs, medical reports, and complaints submitted to the authorities prima facie indicate a matter requiring urgent judicial scrutiny, the HC said.
"Considering the gravity of the allegation and affecting the right to life under Article 21 of the Constitution of India and the need for an independent fact-finding exercise, the Court is of the opinion that the matter requires investigation by an independent, credible authority," it said.
"Accordingly, we appoint Justice Sushil Kumar Gupta, former judge of the Madhya Pradesh High Court, a one-man commission of inquiry into the issues relating to water contamination in Bhagirathpura, Indore, and its impact on other areas of the city," the HC added.
As per the order, the commission shall inquire into and submit a report on the cause of contamination -- whether the drinking water supplied to Bhagirathpura was contaminated; and the source and nature of contamination (sewage ingress, industrial discharge, pipeline damage etc).
The panel will also probe the number of actual deaths of affected residents on account of contaminated water; find out the nature of disease reported and adequacy of medical response and preventive measures; suggest immediate steps required to ensure safe drinking water as well as long-term infrastructural and monitoring reforms.
It will also identify and fix responsibility upon the officers and officials found prima facie responsible for the Bhagirathpura water contamination incident, and suggest guidelines for compensation to affected residents, particularly vulnerable sections.
The commission shall have powers of a civil court for the purpose of summoning officials and witnesses; calling up records from the government department, hospitals, laboratories and civic bodies; ordering water quality testing through accredited laboratories; conducting spot inspections.
All state authorities involving district administration, Indore Municipal Corporation, public health engineering department and Madhya Pradesh Pollution Control Board shall extend full co-operation and provide records as sought by the commission, it said.
The state government shall provide office space, staff, and logistical support to the commission, it said.
During the hearing in the day, the state government also presented a status report to the court in this matter.
According to reports, a total of 454 patients were admitted to local hospitals during the vomiting and diarrhea outbreak, of whom 441 have been discharged after treatment, and 11 are currently hospitalised.
According to officials, due to a leak in the municipal drinking water pipeline in Bhagirathpura, sewage from a toilet was also mixed in the water.
