India's economy has entered into first technical recession since 1996 when the country began quarterly records, with the gross domestic product (GDP) contracting 7.5% in the July-September period. This is the second consecutive quarter of contraction, though it showed signs of rebounding after slipping to a record slump of 23.9% in the previous quarter due to slowdown led by the coronavirus pandemic.

In economics, the term recession is used when the GDP growth rate is negative for two straight quarters or more. In the same September quarter a year ago, GDP had grown 4.4%.

Since the intensity of the nationwide lockdown in the April-June period, the economy has moved into gradual activity as the government eased several restrictions during this period. The recovery has beat several estimates which had forecast a more severe quarter.

The Reserve Bank of India (RBI) had predicted a contraction of 8.6% in the quarter ended September, although it had said that the economy would move to positive growth in the three-month period through to December.

The surprise came from manufacturing which saw a 0.6% growth in the September quarter after it had shrunk 39% in the preceding quarter, as per provisional estimates released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday. Electricity, gas, water supply and other utility services segment grew 4.4% in Q2, from a 7% fall in the preceding quarter. Agriculture, forestry and fishing industry grew at 3.4%, same as the previous quarter.

The construction sector contracted 8.6%, showing improvement from the 50.3% contraction in Q1. Trade, hotels, transport, communication and services related to broadcasting contracted 15.6% in Q2 compared to 47% in Q1.

"Q2 #GDP numbers show that economy is recovering. Government's efforts on stimulus and reform are showing results. Hopefully, we will have positive growth in H2 FY21 and double digit growth in FY22," Vedanta Chairman Anil Agarwal said in a tweet.