Indian GDP numbers announced today have taken market experts and economic analysts by surprise. The contraction at 24 percent is much higher than mean estimates suggested in Reuters poll earlier this week. The GDP data suggests that recovery could take longer however, economic experts also indicate that recovery could be fast once all the manufacturing capacity comes online.

Comments on GDP data by Siddhartha Sanyal, Chief Economist and Head – Research, Bandhan Bank follow....

GDP contraction of close to 24% year-on-year during Q1 FY21 was sharper than expected. Double digit contraction in GDP remains likely also during the current quarter with the headwinds of fresh lockdowns weighing on economic recovery. However, rural activities seem to be relatively more resilient, and might benefit from government’s rural-focussed employment schemes in the coming months.

As regards monetary policy, while rate cuts remain unlikely at least till December, unconventional monetary policy support cannot be ruled out.

Indian markets could face steep correction in the coming sessions as market experts were looking at much lower contraction in Indian economy.