Construction sector will be the worst affected segment of the economy and is estimated to contract by 12.6% during 2020-21, reveals the advance estimates of GDP for 2020-21 released by National Statistics Office yesterday.
According to NSO estimates, Mining is another sector which will be badly affected during the current financial year and is expected to contract by 12.4%. Agriculture (3.4%) and Utilities (2.7%) are the only two sectors which will be seen growing during the year.
Contraction of construction sector was expected as the sector had come to a complete standstill during lockdown due to strict adherence to social distancing norms. Further, its recovery was affected by reverse migration of migrant workers to their native villages fearing the spread of pandemic. It took considerable time for the sector to recover and in fact full recovery happened only during the festive season.
According to the first advance estimates of NSO the real GDP at 2011-12 prices in 2020-21 is expected to contract by 7.7 per cent and nominal GDP at current prices by 4.2 per cent.
As per quarterly estimates of NSO, real GDP contracted by 15.7 per cent in first half of 2020-21. Real GDP on a quarter-on-quarter basis grew at 21 per cent from Q1: FY 2020-21 to Q2: FY 2020-21. The AE of 2020-21reflect continued resurgence in economic activity in Q3 and Q4 – which would enable the Indian economy to end the year with a contraction of 7.7 per cent. The continuous quarter-on-quarter growth endorses the strength of economic fundamentals of the country to sustain a post-lockdown V-shaped recovery.
The movement of various high frequency indicators in recent months, points towards broad based nature of resurgence of economic activity. The relatively more manageable pandemic situation in the country as compared to advanced nations has further added momentum to the economic recovery.