India exits recession, but will GDP growth sustain?

Strong festive sales boosted growth numbers in the final quarter of 2020 as India exited recession after two quarters of growth contraction. GDP for the October-December period is now pegged at 0.4% , the first expansion after the pandemic hit. India is now one of the few economies that saw growth expand in the quarter gone by.  

Though technically the recession may be over but it is not all good news the govt has revised  the full year GDP to reflect a contraction of 8% vs –7.7% earlier. Some of the internal indicators are also not very encouraging for example spending from the govt as well private spending have shown a contraction on a year on year basis.  

It is definitely too early to celebrate the recovery as International ratings agency Moody’s warns that the risk to growth forecast for India is tilted to the downside. Even JPMorgan has raised an alarm that  a consumer credit crisis could derail India’s economic recovery . For the weekend however economy watchers can enjoy the headline that India has exited recession.