The Indian economy has finally bounced back into growth territory, ending technical recession, in the October-December period after two consecutive quarters of GDP contractions. Official data released by the government showed that the GDP has grown 0.4 per cent in the December quarter.
The gross domestic product (GDP) had expanded by 3.3 per cent in the corresponding period of 2019-20, according to the data released by the National Statistical Office (NSO).
In its second advance estimates of national accounts, the NSO has projected 8 per cent contraction in 2020-21. In its first advance estimates released in January, it had projected a contraction of 7.7 per cent for the current fiscal as against a growth of four per cent in 2019-20.
Economists and research firms had widely expected India's GDP to grow in the third quarter on the back of higher economic activity and reducing number of coronavirus cases in the country.
While several challenges are yet to be addressed, this marks India first step towards growth after entering a recessionary phase following the 7.5 per cent contraction in the second quarter of FY21.
The situation was even worse in the first quarter when GDP contracted 23.9 per cent due to a strict nationwide lockdown to contain the coronavirus pandemic.
Many research firms and economists have also indicated that India's economic growth in the fourth quarter will improve further due to the mass vaccination drive that started in the country from January.
While India's economy is gradually recovering, some analysts have warned about the sharp rise in fuel prices in the country and rising Covid-19 cases in some states including Maharashtra and Kerala.
Moreover, they also highlighted that not all sectors have managed to recover from the initial impact of the pandemic. Sectors like airlines, tourism and border services are still reeling under pressure and higher fuel prices may put further strain on some of these sectors.