India Heading For A Recession: RBI’s Experts

The pandemic has shown a huge impact on the Indian economy. For the April to June quarter, the Gross Domestic Product (GDP) slumped to 23.9 percent which is unprecedented in the history of Indian economy and now for the July to September quarter, the GDP contracted by 8.6 percent.

The latest figures indicate that India has technically entered into recession says Reserve Bank of India (RBI) in its first ever published ‘nowcast,’ which is an estimate based on high-frequency data. And for the full fiscal year, the RBI estimates that the economy will contract by 9.5 percent. The official GDP data will be released later this month probably on November 27th.

The RBI experts assessed these findings with the help of vehicle sales to flush banking liquidity but the central bank sees a hope that the economy could improve for the October to December month as the GST revenue collections for the month were Rs 1,05,155 crore, which is 10 percent higher than October 2019.

However the RBI is sceptical about the recovery as the second wave of the Covid-19 has already spread across several states in the country. Millions have lost their jobs and the consumers started spending less due to this household financial savings has spiked up. For the June quarter the household financial savings jumped to 21.9 percent compared to 7.9 percent in June 2019.