India's Gross domestic product (GDP) likely contracted by 8.6 percent in the July-September period according to the RBI official in a monthly bulletin article. The data points out that in the April-June quarter, India's GDP contracted by a sharp 23.9 percent when compared to the corresponding period a year ago. Two successive quarterly negative growths in GDP technically imply a recession. If GDP has really contracted in the September-ended quarter on account of COVID-19 restrictions, India will have entered into a recession for the first time in history.

 The RBI has estimated that the economy will contract by 9.5 percent for the full fiscal year. "India has entered 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,"

As per the article 'Economic Activity Index', authored by Pankaj Kumar of the Monetary Policy Department, it   added that the contraction is "ebbing with gradual normalization in activities and expected to be short-lived." The index is constructed from 27 monthly indicators using a dynamic factor model and suggests that the economy rebounded sharply from May/June 2020 with the reopening of the economy, with industry normalizing faster than contact-intensive service sectors.”

The estimated increase in financial savings looks steady with other macro-economic statistics, in particular the decline in private final consumption expenditure and the surplus position in the external current account, it said.

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