India’s Gross Domestic Product (GDP) grew by 20.1% in the first quarter of 2021-22, compared with the 24.4% contraction recorded in the corresponding quarter a year ago, but economic activity remained well below the pre-pandemic levels, thanks to the second wave of COVID-19.
- Gross Value Added (GVA) in the economy during the April to June period rose 18.8%, as per the National Statistical Office (NSO), from a 22.2% dip in the first quarter of 2020-21.
- GVA from agriculture, forestry and fishing, the only sector to grow amid last year’s national lockdown, picked up pace to grow 4.5% in Q1 this year from 3.5% in Q1 2020-21.
- Overall GVA in Q1 was still 7.8% lower than the first quarter of 2019-20, at ₹30,47,516 crore, while GDP remained 9.2% lower, indicating that the economy still has some way to go before it returns to activity levels prevalent prior to the pandemic.
- Electricity, Gas, Water Supply & Other Utility Services, whose GVA grew 14.3% in Q1 of 2021-22, compared to a 9.9% fall last year, was the only sector along with Agriculture, Forestry and Fishing, to recover beyond the pre-pandemic levels of 2019-20.
- “The growth rates in 2021-22 in some cases are unduly high due to the low base,” the NSO pointed out as a caveat for interpreting the GDP estimates that show all major industries rebounding from sharp contractions in the first quarter of last year.
- Construction and Manufacturing GVA recorded a 68.3% and 49.6% uptick between April and June this year, compared to a 49.5% and 36% contraction, respectively, last year.
- GVA from Trade, Hotels, Transport, Communication & Services related to Broadcasting recorded a 34.3% jump after dipping 48.1% in the same quarter last year
- However, this employment- and contact-intensive services sector was still 30.2% below 2019-20 levels, suggesting a contraction of ₹2.1 lakh crore.
- “The main disappointment comes from the contribution of the government sector, both from the demand and output sides . government final consumption expenditure (GFCE) contracting by 4.8% in Q1 this year — the only demand segment to show a fall.
- On the output front, public administration, defence and other services such as education, health and recreation grew 5.8% but remained 5% lower than the pre-pandemic level.
- “Manufacturing and construction were the key drivers of the pickup in GVA growth in Q1, whereas on the expenditure side, private consumption and investment powered the turnaround in the GDP performance.
- The Reserve Bank of India and the International Monetary Fund had revised their growth projections for the year to 9.5%.
- CARE Ratings revised its GDP growth estimate for the year to 9.1% from 9.2%, following Tuesday’s data, as it expects growth rates in the next three quarters to be progressively lower with the base effect wearing off.
Source – The Hindu