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 India’s economy showed signs of recovery in the third quarter of the fiscal year 2020-21, as the Gross Domestic Product (GDP) growth rate increased to 0.4% – a significant jump after two consecutive quarters of contraction.

GDPThe growth rate, which is calculated on a year-on-year basis, indicates that the Indian economy has started to revive from the pandemic-induced lows of Q1 and Q2, which witnessed a contraction of 24% and 7.5% respectively.

According to the data released by the National Statistical Office (NSO), the gross value added (GVA) at basic prices during the third quarter of the current fiscal declined by 0.3% as compared to a contraction of 15.7% during the same period last year.

The positive growth rate can be attributed to the easing of lockdown restrictions and the festive season demand for consumer goods and services. The Centre’s measures to boost business and consumer confidence, coupled with the Reserve Bank of India’s monetary policy support, also played a crucial role in driving the economic recovery.

However, the NSO cautioned that the Indian economy is still not out of the woods, and the path to complete recovery is likely to be uneven and gradual. Several industries such as hospitality, tourism, and aviation are still grappling with the pandemic’s impact, and the increasing fuel prices and inflationary pressure could dampen consumer demand.

Despite the positive growth rate, India’s economy is projected to contract by 7.7% for the fiscal year 2020-21 – the worst performance in four decades. However, the government’s push towards infrastructure development, job creation, and structural reforms could pave the way for a robust economic growth trajectory in the coming years.

The uptick in GDP growth rate, even though marginal, provides a glimmer of hope for the Indian economy, which is still recovering from the pandemic’s devastating impact. The government’s efforts to boost the economy and the expansionary monetary policy will play a crucial role in nurturing this budding recovery, and the outlook for the next few quarters looks promising.

So, it is an excellent time for investors to stay patient and confident in the Indian market.

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