Is India's economic recovery V-shaped? All eyes on GDP data today

Gross domestic product (GDP) data to be released on Friday will shed light on whether the economy continued to be in recession in the third quarter (Q3) of 2020-21 (FY21) or it ended with the second quarter only.
 
Economists have divergent views on it. Some believe GDP may have contracted as high as up to 2 per cent in the quarter ended December 31, 2020. This means the economy could not snap out of recession.
 
Still others say the economy may have grown up to 1.8 per cent in the quarter.
 
The economy contracted at an unprecedented 23.9 per cent in the first quarter (Q1) of FY21 and 7.5 per cent in Q2. This resulted in the economy entering recession phase for the first time since the quarterly estimates began to be released in India in 1999. The data will also provide answers to queries on V-shaped economic recovery.
 
The government, on its part, inferred from the Q2 GDP data, along with high-frequency indicators, that the economic recovery is indeed V-shaped.

 
The Economic Survey for FY21 presented in January observed that “the initial stringent lockdown was critical to saving lives and a V-shaped economic recovery”.
 
It further stated that while the lockdown resulted in 23.9-per cent contraction in GDP in Q1, recovery has been V-shaped as seen in the 7.5-per cent decline in Q2 and recovery across key economic indicators.
 
Since July, a resilient V-shaped recovery has been underway, as demonstrated by a recovery in GDP growth rate in Q2 after a sharp decline in Q1, a sustained resurgence in high-frequency indicators, such as power demand, e-way bills, GST collection, and steel consumption, the Economic Survey noted.

 
Along with Q3 GDP data, the Ministry of Statistics and Programme Implementation will also release the second Advance Estimates for FY21.
 
The first Advance Estimates had pegged GDP contraction to 7.7 per cent for the entire year. Of late, Advance Estimates have not been up to mark in projecting GDP numbers.