India’s economy is having chances of ranking for a second straight quarter, as per the team of economists including Michael Patra, central bank’s deputy governor in charge of monetary policy, pressurizing country into unprecedented recession.
As Gross domestic product contracted 8.6% in the quarter ended September, the Reserve Bank of India showed in its first-ever published ‘nowcast,’ which is an estimate based on high-frequency data.
The economy slumped about 24% in April to June.
“India has entered a technical recession in first half of 2020-21 for the first time in its history,” the authors stated. The government is necause to publish official statistics on November 27.
The Reserve Bank’s number buoyed by cost cuts at companies that boosted operating profits even since sales dipped.
The team of authors even used a range of indicators from sales to flush banking liquidity to signal brightening prospects for October.
If such upturn is sustained, the Indian economy would return to growth in the October-December quarter, previously projected by Governor Shaktikanta Das last month, when he pledged to keep monetary policy accommodative.
However, “s a risk of generalization of price pressures, unanchoring of inflation expectations feeding into loss of credibility in policy interventions,” the team of economists wrote in Reserve Bank’s bulletin.
They also highlighted risks of global growth from the second wave of Coronavirus infections.
“Lurking around corner is third major risk stress intensifying among households as well as corporations which delayed but not mitigated, and could spill over into financial sector,” the economists stated.