The National Statistics Office (NSO) data also revised contractions of 7.3 per cent in July-September and 24.4 per cent in April-June.
Here’s what experts have to say on the GDP numbers:
Chandrajit Banerjee, director general, CII: “Recouping of GDP to the positive territory by posting a growth of 0.4 per cent in the third quarter is a promising sign as it portends the end of the pandemic-induced recessionary phase seen in the first-half of the year”.
One of highlights of the data is the positive momentum seen in investment demand as it grew by 2.6 per cent in the third quarter after being in doldrums for several quarters now.
“This bears testimony to the unrelenting efforts of the government to go all-out to revive investments under the ambit of the various measures which formed a part of the Aatmanirbhar Bharat package.
Going forward, we are confident that the growth stimuli available from the Union Budget and the additional measures including the PLI will lead to a sturdy growth path over the recovery horizon.”
Assocham secretary general Deepak Sood: “The GDP growth of 0.4 per cent for the third quarter of FY21 is no surprise, but it marks a significant turnaround into the Indian economy returning to a positive trajectory after sharp drops in the first two quarters, even as the war against Covid-19 is continuing.
The last quarter of the current fiscal should be far better.
The real recovery would be seen in the FY22, beginning with the first quarter and then picking up pace later.”
Ashutosh Datar, Mumbai-based economist: “We can’t say we are completely out of the woods. The real test would be what happens next financial year. Today’s number is not a major surprise.”
The government has forecast economic growth of 11 percent in the 2021-22 financial year, in line with the International Monetary Fund’s prediction of 11.5 per cent.”
Pronab Sen, India’s former chief statistician: “The real question is if a second Covid wave happens, what will be the reaction? If it is a national lockdown like we had last March, then the effects will be just as negative.”
Shashank Mendiratta, economist, IBM, New Delhi: “GDP growth returned to positive territory after contracting for two successive quarters. At component level, investment GDP recorded its first growth since December 2019. This recovery in investment is likely driven by capex spending.
Weakness in private consumption also eased markedly during the quarter, even as it continued to show a contraction. Consumption of durable goods has picked up following the lifting of lockdown, while those of services continue to weigh on private spending.
Demand for contact intensive sectors will likely improve gradually as consumers regain confidence. While growth has returned to positive, the momentum would need to improve further for a sustained return to pre-COVID output levels.”
Kunal Kundu, India economist, Societe Generale, Bengaluru: “The Indian economy has turned a corner during 4Q20, growing by 0.4% yoy, slightly lower than the consensus expectation, though we expected one final quarter of contraction.
To us, the data appears to be at variance with the high frequency data. Disaggregated data shows that domestic consumption continued to contract while real government spending dipped too, albeit marginally.
A sharp pick up in investment enabled the economy to record a marginally positive growth as did a lower trade deficit on account of less-than-robust economic activity. Going forward, we believe that investment and not consumption will be India’s growth driver.”
Rupa Rege Nitsure, group chief economist, L&T Financial Holdings, Mumbai: “India’s GDP data for Q3 tells the same story, which many other nations are witnessing. Economic growth has turned positive for several countries in the Oct-Dec quarter, partly attributed to the policy stimulus and partly to the optimism created by Covid-19 vaccination. However, India’s GDP growth is lowly positive in Q3 as the stresses continue in mining, manufacturing & services sectors.
Indian growth during the pandemic is primarily supported by agriculture, construction activities and the Government’s Capex spending. Consumption spending continues to stay weak both for the private and public sectors.”
Siddhartha Sanyal, chief economist and head of research, Bandhan Bank, Kolkata: “The 0.4% y/y growth in real GDP is broadly in line with Street expectations and is significantly stronger than the GDP prints witnessed during the previous two quarters. The current print will likely further boost the expectation of a 7%-8% y/y contraction in real GDP during FY21.
Furthermore, while expectations of GDP growth during FY22 remain strong, partly reflecting a markedly favourable base, one needs to note that the path for sequential growth can still be uneven and uncertain. Given the uncertainties around investments and exports, recovery prospects currently hinge critically on an uptick in private consumption.
Accordingly, one would expect support from public policy – both fiscal and monetary – will remain strong in the coming months.”
Sakshi Gupta, senior economist, HDFC Bank, Gurugram: “Q3 GDP was slightly lower than expectations, albeit showed that the economy did move into the green. Going ahead, we are likely to see a continuation of a K-shaped recovery with some sectors growing faster than others.
We expect growth to print at 1.5% in Q4 and -7.5% for the whole year FY21. We expect GDP for FY22 at 11.5%. We expect the economy to reach pre-pandemic output levels by the end of the calendar year 2021.
That said, there are some risks that need to be watched out including rising commodity prices, slow global recovery, and the pace of recovery in the informal sector and contact intensive services with the resurgence of domestic cases.”
Prithviraj Srinivas, chief economist, Axis Capital, Mumbai: “Headline Dec-quarter GDP was a mixed bag with GVA (gross value added) growth +1% YoY coming close to our estimate, although some of the internals in the data were underwhelming. Having said that, the outcome is not entirely negative considering downward revisions for previous quarters.
These numbers will surely get revised further given this is an exceptional year. The GDP data confirms sharp activity uptick in Dec quarter and positive YoY growth one quarter ahead of earlier expectations.
High frequency indicators in January and February show that activity levels have stabilized post Dec quarter therefore continued growth momentum. However, we haven’t overcome the health crisis as yet and hence policy will continue to lean towards supporting growth.”
(With inputs from agencies)