GDP to be in growth territory in Dec quarter: Icra

Mumbai: After two consecutive quarters of contraction, India's GDP is set to revert to the growth territory in the October-December 2020 period compared to the year-ago period, according to a report.

Private consumption and government spending will help the economy post a turnaround during the December quarter and the GDP will grow 0.7 per cent, Icra Ratings said in a report on Tuesday.

The economy contracted almost by a fourth in the June quarter and by 7.5 per cent in the September quarter in the current fiscal. Even as a recovery is underway, official estimates peg the FY21 contraction at 7.7 per cent.

It can be noted that the economic growth has been on a downward spiral for over three years till it went into a contraction mode. "The forecasted growth in Q3 FY21 while undoubtedly mild and uneven is nevertheless welcome as it signifies that the economy has exited the Covid-19 pandemic-induced recession after two tumultuous quarters," the rating agency said.

Its principal economist Aditi Nayar said the revival in central government spending supported the Indian economy's exit from the recession in Q3 FY21 and pointed out that after a decline of 14.2 per cent in Q2FY21, the Government of India's (GoI's) non-interest revenue expenditure rose by 22.9 per cent in Q3 FY21.

She said almost all the non-agricultural lead indicators tracked by the agency recorded a continued, albeit uneven, improvement in volume terms in the December quarter on continued unlocking of the economy, uptick in consumption during the festive season, and centre spending.