Manas R. Das
The National Statistical Office (NSO), on August 31, 2021, released the Gross Domestic Product (GDP) estimates for the first quarter (Q1) (April-June) of 2021-22. According to the estimates, GDP at constant (2011-12) prices in Q1 stood at Rs.32.38 lakh crore. At this level, the real GDP growth rate vaulted to (+)20.1% from (-)24.4% in Q1 of the previous year. Similarly, the Gross Value Added (GVA) at basic prices at constant (2011-12) prices for 2021-22 Q1 was estimated at Rs.30.48 lakh crore indicating a gigantic (+)18.8% growth in contrast with (-)22.4% growth in 2020-21 Q1 (See Chart 1).
At current prices, GDP in 2021-22 Q1 was estimated at Rs.51.23 lakh crore which was substantially higher by 31.7% than that a year ago. This compared highly favourably with (-) 22.3% growth recorded in the similar period previous year. At basic prices current prices, GVA was estimated at Rs.46.20 lakh crore in 2021-22 Q1 – a year-on-year expansion of 26.5% compared to a contraction of 20.2% in 2020-21 Q1.
All the three sub-sectors of ‘Industry’ – ‘Mining & quarrying’, ‘Manufacturing’ and ‘Electricity, gas, water supply & other utility services’ – expanded by 18.6%, 49.6% and 14.3% respectively in contrast with huge declines observed a year ago. Among the core sectors, production of coal, steel and cement increased by 8.0%, 103.1% and 52.9% respectively compared to declines a year ago. Production of crude oil continued to remain in the negative zone, but with less intensity.
Some of the lead indicators such as sales of commercial vehicles, cargoes handled at major sea ports and airports, and passengers handled at airports reflected visible increases from the previous year’s declines. Passenger and goods movement by the Railways also revived.
In the financial sector, bank deposits as well as loans continued to remain sluggish. In terms of premium collected by the Life Insurance Corporation, the linked schemes grew perceptibly, whereas the non-linked schemes marginally.
Table 1 presents a comparative view of the sub-sectoral growth rates in GVA.
In the ‘services’ sector, all the sub-sectors revived with growth rates in the positive territory. While ‘Construction’ and ‘Trade, hotels, transport, communication & services related to broadcasting’ put forth relatively high growth rates, ‘Financial, real estate & professional services’ and ‘Public administration, defence & other services’ showed much low growth rates.
The expansion in economic activities was well expected due to less intensity of the COVID-19 and relaxation in shutdowns – both at national and local levels. This pushed up output and employment. Going forward, the situation is expected to improve further provided monsoon is generally normal and the much-apprehended third wave of COVID-19 doesn’t materialise. In the medium-term, geopolitical tensions cannot be wished away.
About the Author:
Dr. Manas R. Das is a former senior economist of the State Bank of India. He has over 30 years of experience as an economist in two large commercial banks. Academically, he is a gold medalist in Bachelor of Arts with Economics Honours from Utkal University, followed by Master’s in Economics from Delhi School of Economics and Doctorate in Economics from Gokhale Institute of Politics and Economics. He is also a Certified Associate of the Indian Institute of Bankers. He has won several awards, besides being a prolific writer.