Explained: What is a technical recession? -Udit Misra
-The Indian Express
Latest RBI bulletin projects contraction for a second consecutive quarter, which means the economy is in a ‘technical recession’. What does it mean, and how is it different from a ‘recession’ and a ‘recessionary phase’?
In its latest monthly bulletin — for November — the Reserve Bank of India has dedicated a chapter on the “State of the economy”. The idea is to provide a monthly snapshot of some of the key indicators of India’s economic health. “By doing so, a hallowed tradition that began with the first issue of the Bulletin in January 1947, but interrupted during the period 1995 to date, will be revived,” the bulletin said.
As part of the exercise, the RBI has started “nowcasting” or “the prediction of the present or the very near future of the state of the economy”. And the very first “nowcast” predicts that India’s economy will contract by 8.6% in the second quarter (July, August, September) of the current financial year.
While this pace of contraction is considerably slower than the 23.9% decline in the real gross domestic product (GDP) during the first quarter (April, May, June), the contraction of Q2 is crucial because it implies India that has entered a “technical recession” in the first half of 2020-21— for the first time in its history.
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The Indian Express, 13 November, 2020, https://indianexpress.com/article/explained/what-is-a-technical-recession-indian-economy-coronavirus-7049758/