On Friday, data released by the National Statistical Office (NSO) showed that India's GDP (gross domestic product) contracted by 7.5% in the July-September quarter, when compared to the same period last year.
This officially marks India's entry into economic recession. In economics, two consecutive quarters of contraction in GDP growth is technically considered a recession.
Official data for the April-June period released in August showed that the country's GDP contracted by 23.9% when compared to 5.2% growth in the same period a year ago. The shrinkage was the highest ever reported in India's documented quarterly GDP data post-independence.
The data released on Friday further showed that the country's gross value added (GVA) contracted by 7% during the quarter.
Another set of data released on Friday by the Ministry of Commerce & Industry showed that the index of eight core infrastructure sectors of the economy contracted 2.5% in October.
Even with an improvement in contraction in GDP, India remains one of the worst-performing economies among 24 major countries. The UK reported a higher contraction of 9.6%t in the July-September period, while China remained the only country to have seen growth (of 4.9%) during the period.
Economists polled by Reuters estimated the Indian economy to shrink by 8.8% in the September-ended quarter. They also expect GDP to fall in the October-December quarter, followed by a 0.5% expansion between January and March, with the economy shrinking 8.7% over the whole financial year 2020-21, the country's worst performance in at least four decades.
Despite some signs of improvement in growth seen in October's macro data like IIP and PMI, RBI governor Shaktikanta Das said on Thursday, ahead of the GDP data that a recent surge in infections presents downside risks for the economy.
"We need to be watchful about the sustainability of demand after the festivals and a possible reassessment of market expectations surrounding the vaccine," he said.