Page 205 - NHB AR 2020-21-3 complete- Print (1)
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The year-on-year contraction in trade by 18.2 per cent, construction 8.6 per cent, mining
8.5 per cent, manufacturing 7.2 per cent was observed, as majority of the labour force are
employed under these industries, which are severely affected by the pandemic lockdowns.
However, fourth quarter showed signs of improvement, evident from sequential growth
in manufacturing and services, helped by normalising demand conditions. The industry
growth of 7.9 per cent in Q4FY21 is the maximum contribution to 1.6 per cent GDP growth.
Manufacturing, electricity & construction growth was higher as compared to sequential
figures. Growth in construction activity (demand side) at 14.5 per cent during Q4FY21 is fully
supported by 18.2 per cent growth of Gross Fixed Capital formation (supply side), (Table -2)
led by public capex push by the central and state government. The revival in service sector
was sluggish, grew by 1.5 per cent in Q4 followed by three quarters contraction. On the
expenditure side, (Table – 2) a positive impact on consumption expenditure was observed
in Q4FY21 with 6.6 per cent growth as lockdown eased. However, the second wave is the
constraint for forthcoming consumption spending data. Government spending grew at 24.4
per cent in Q4FY21, backed by massive spending by the government that includes clearing of
subsidy arrears. The Gross Fixed Capital (Investments) grew by 18.2 per cent in Q4FY21 led
by capex push by the government.
Table – 2
Expenditure on GDP at current FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 FY21
prices (y-o-y) % 5.6 18.2 -8.6
7.3 24.4 8
Investments (Gross Fixed 6.1 -47.7 -8.8 0.6 6.6 -6
Capital)
Govt. spending (Govt. final 12.1 21.3 -16.9
consumption expenditure.)
Consumer spending (private 9.7 -24.7 -8.2
final consumption expenditure.)
Source: Central Statistical Organisation (CSO), MoSPI
However, the second wave of the pandemic has taken a grievous toll. The recovery that had
commenced in the second half of FY21 was dented in April-May 2021, but with the wave of
infections abating as rapidly as it had set in, economic activity has started to look up in late
May and early June. The stepped-up pace and scale of vaccination is catalysing the insulation
of our communities from infections and gradually releasing the economy from regional and
localised containment measures. The economy is slowly getting back to normalcy as the
number of COVID-19 cases is declining with improved vaccination drive. The growth will be
bolstered by a slew of structural reforms undertaken by the government to address supply
side constraints and opening more and more sectors for foreign investment. RBI expects the
economy to grow at the rate of 21.4 per cent in Q1; 7.3 per cent in Q2; 6.3 per cent in Q3; and
6.1 per cent in Q4 of FY22. Real GDP growth for Q1FY23 is projected at 17.2 per cent.
Annual Report 2020-21 | 185
8.5 per cent, manufacturing 7.2 per cent was observed, as majority of the labour force are
employed under these industries, which are severely affected by the pandemic lockdowns.
However, fourth quarter showed signs of improvement, evident from sequential growth
in manufacturing and services, helped by normalising demand conditions. The industry
growth of 7.9 per cent in Q4FY21 is the maximum contribution to 1.6 per cent GDP growth.
Manufacturing, electricity & construction growth was higher as compared to sequential
figures. Growth in construction activity (demand side) at 14.5 per cent during Q4FY21 is fully
supported by 18.2 per cent growth of Gross Fixed Capital formation (supply side), (Table -2)
led by public capex push by the central and state government. The revival in service sector
was sluggish, grew by 1.5 per cent in Q4 followed by three quarters contraction. On the
expenditure side, (Table – 2) a positive impact on consumption expenditure was observed
in Q4FY21 with 6.6 per cent growth as lockdown eased. However, the second wave is the
constraint for forthcoming consumption spending data. Government spending grew at 24.4
per cent in Q4FY21, backed by massive spending by the government that includes clearing of
subsidy arrears. The Gross Fixed Capital (Investments) grew by 18.2 per cent in Q4FY21 led
by capex push by the government.
Table – 2
Expenditure on GDP at current FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 FY21
prices (y-o-y) % 5.6 18.2 -8.6
7.3 24.4 8
Investments (Gross Fixed 6.1 -47.7 -8.8 0.6 6.6 -6
Capital)
Govt. spending (Govt. final 12.1 21.3 -16.9
consumption expenditure.)
Consumer spending (private 9.7 -24.7 -8.2
final consumption expenditure.)
Source: Central Statistical Organisation (CSO), MoSPI
However, the second wave of the pandemic has taken a grievous toll. The recovery that had
commenced in the second half of FY21 was dented in April-May 2021, but with the wave of
infections abating as rapidly as it had set in, economic activity has started to look up in late
May and early June. The stepped-up pace and scale of vaccination is catalysing the insulation
of our communities from infections and gradually releasing the economy from regional and
localised containment measures. The economy is slowly getting back to normalcy as the
number of COVID-19 cases is declining with improved vaccination drive. The growth will be
bolstered by a slew of structural reforms undertaken by the government to address supply
side constraints and opening more and more sectors for foreign investment. RBI expects the
economy to grow at the rate of 21.4 per cent in Q1; 7.3 per cent in Q2; 6.3 per cent in Q3; and
6.1 per cent in Q4 of FY22. Real GDP growth for Q1FY23 is projected at 17.2 per cent.
Annual Report 2020-21 | 185
