RBI’s Economic Activity Index estimates that India’s GDP growth for the second quarter of the current financial year was negative and the GDP contracted by 8.6 per cent during the quarter.

“India has entered into a technical recession in the first half of 2020-21 for the first time in its history with Q2:2020-21 likely to record the second successive quarter of GDP contraction,” it said.The contraction is ebbing with gradual normalisation in activities and expected to be short-lived.

Meanwhile, Moody’s Investors Service said on Thursday that it expects India’s economy to shrink by 8.9% in the 2020 calendar year due to the pandemic, compared to an earlier forecast of a 9.6% contraction. The revision comes as a rise in Covid-19 cases slows in India, and economic activity picks up after a 23.9% contraction in April-June.

“The steady decline in new and active (CCovid-19) cases since September, if maintained, should enable further easing of restrictions. We, therefore, forecast a gradual improvement in economic activity over the coming quarters,” Moody’s said in a note.

As for the RBI report, it said that at a time when global economic activity is besieged by the outbreak of the second wave of Covid-19, incoming data for the month of October 2020 have brightened the near-term outlook for the Indian economy and stirred up consumer and business confidence.

“Since the assessment of the performance of the Indian economy in the first half of 2020-21 that was presented in the Monetary Policy Report of October 2020, several developments point to a window of respite opening up and an unshackling of economic activity from the grip of Covid-19 as the festival season sets in,” it said.

WITH AGENCY INPUTS