GDP Data: Agriculture a relief, construction, trade, travel & hotels worst hit

According to the latest GDP data released by the National Statistics Office (NSO) on Monday, growth in the Agriculture sector was 3.4% against the 3% growth recorded during the same period last year.

New Delhi:India’s agriculture sector has emerged as the only bright spot as all other seven important sectors of the economy tracked by the country’s top statistics body registered a sharp contraction during the first three months of this financial year, leading to the biggest contraction in GDP growth of the country in the last four decades.

According to the latest GDP data released by the National Statistics Office (NSO) on Monday, growth in the Agriculture sector was 3.4% against the 3% growth recorded during the same period last year.

However, the only silver-line in India’s growth story ends with the agriculture sector where all previous data sets, including the increase in the area of sowing, sale of fertilisers etc have indicated a better performance as the Centre has exempted the farm sector from lockdown measures since the beginning.

Construction, Trade, Hotels, Transportation, Manufacturing worst hit

India’s construction sector, one of the largest employment providers outside the agriculture sector, was the worst hit by the Covid-19 lockdown measures as most of the workers fled cities for the safety of their hometowns and villages.

Prime Minister Narendra Modi imposed a nationwide lockdown from March 25 this year, which led to the biggest reverse migration in the history of independent India, severely impacting the labour intensive construction sector.

As a result, the construction activity in the next three months, April-June period, registered a sharp contraction of 50.3% against the 5.2% growth registered during the same quarter last fiscal.

Trade, hotel and hospitality sector, transportation, and communication sectors were the second biggest casualty of Covid-19 lockdown measures that is expected to cause a loss of $9 trillion to the world economy this year.

These sectors suffered a contraction of 47% in the first quarter against the 3.5% growth registered during the same period last year. Manufacturing sector was the third biggest casualty of the adverse economic impact of the deadly SarS-CoV-2 virus that has killed over 64,400 people in the country and more than 8,50,000 people world over.

Manufacturing sector, which was already on a weak ground, as it grew by just 3% during the first quarter of last year, could not withstand the adverse impact of Covid-19 virus, and registered a contraction of 39.3% in the first quarter of the current financial year.

It will be a challenge for Prime Minister Narendra Modi and his team to reverse this sharp contraction in the manufacturing sector that is crucial for employment generation and his ambitious Self-reliant India mission (Atma Nirbhar Bharat Abhiyan).

Mining sector also suffered a sharp contraction of 23.3% during the first quarter against the growth of 4.7% during the same period last year.

Government activity contracts during Covid-19 lockdown

The strict lockdown measures enforced by the Centre not only impacted construction, trade and travel sectors but they also adversely impacted the public administration and defence services which were otherwise a bright spot last year.

According to the NSO data, public administration, defence and other services registered a decline of 10.3% during the April-June period this year against the growth of 7.7% in the first quarter of last fiscal.

Contrary to the general perception, consumption of electricity, gas, water and other utility services contracted by 7% in April-June this year against a healthy growth of 8.8% during the same period last year.

It was believed that consumption of electricity and other services will register a spike as people were forced to stay indoors during the country’s harsh summer but the latest data suggests otherwise.

Among the 8 core sectors, except agriculture, seven other sectors have contracted during the Covid period.

In the first quarter, financial, real estate and professional services also suffered a contraction of 5.3 per cent against the growth of 6% during the same period last year.

(Article by Krishnannad Tripathi)