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India’s economy exited the recession and grew by 0.4% in Q3 FY21 after contracting 24.4% in Q2 and 7.3% in Q3.
India is now one of the few major economies to post growth in the last quarter of calendar year 2020, with improvement in the economy’s performance inversely tied to a drop in Covid-19 infections (even in most of the European economies the GDP contraction became more deep in Q4 2020 as compared to Q3 2020). But as India has seen an uptick in cases over the last few weeks, it has raised the risk of a new round of localised lockdowns. New curbs on movement of people or restrictions on businesses are a risk to the nascent recovery, given that gains in Q3 quarter probably came from the reopening of the economy.
Q4 GDP growth is however estimated to decline in Q4 FY21 because of a statistical aberration with food subsidy clean up. GVA for Q4FY21 is at 2.7% and it is a better estimate to gauge economic recovery in the current background when tax numbers are notoriously fickle.
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