Economic Survey: Services Sector Hardest Hit by COVID, But Contributed Over 50% To India’s GDP
The Services sector, which contributes over 50 per cent to country's gross domestic product (GDP), has registered a steady recovery during the first half of the current fiscal year.
Economic Survey: India’s services sector has been the worst affected by the COVID-19 pandemic, especially segments that involve human contact, according to the Economic Survey 2021-22. The sector, which contributes over 50 per cent to country’s gross domestic product (GDP), has registered a steady recovery during the first half of the current fiscal year. Overall, the Services Sector grew by 10.8% Year on Year (YoY) in the first half (H1) 2021-22, according to the economic survey.
“While non-contact services such as information, communication, financial, professional and business services have remained resilient, the impact has been much severe on contact-based services such as tourism, retail trade, hotel, entertainment and recreation, etc,” according to the survey.
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The Economic survey also added that the overall Services sector GVA is expected to grow by 8.2 percent in 2021-22, although the spread of Omicron variant brings in a degree of uncertainty for near term, especially in segments that require human contact.
During the first half of 2021-22, the services sector grew by 10.8 per cent. The recovery is more pronounced given the Gross Value Added (GVA) of Services crossed the pre-pandemic level in Q2 2021-22, it stated. However, being a contact intensive sub-sector, GVA of ‘Trade, hotels, transport, communication & services related to broadcasting’ still remains below its pre-pandemic level.
While non-contact services such as information, communication, financial, professional, and business services have remained resilient, the impact has been much more severe on contact-based services such as tourism, retail trade, hotel, entertainment, and recreation, the Economic Survey said.
Here are some of the key takeaways from Economic Survey 2022:
- Growth in 2022-23 will be driven by widespread vaccinations, gains from supply-side reforms, easing of regulation, robust export growth availability of fiscal space to ramp up capital spending: Principal Economic Advisor Sanjeev Sanyal
- There has been a major boom in the start-up culture in India in last 6 years. There are at least 555 districts in the country with at least one startup. India has become the third-largest startup ecosystem in the world after US, China: Principal Economic Advisor Sanjeev Sanyal
- India’s GDP is projected to grow in real term by 8-8.5% in 2022-23. We will still be the world’s fastest economy: Principal Economic Advisor Sanjeev Sanyal
- Many commentators expressed fear in the last two years that the financial system will be very stressed due to the pandemic-related shock. However, this sector has weathered out rather well: Principal Economic Advisor Sanjeev Sanyal
- The inflation during the year 2021 reflected the disruptions caused by the lockdown & supply chain disruptions. Since things opened up this year, Consumer Price Index (CPI) came back into the tolerance band & remain so at 5.6%: Principal Economic Advisor Sanjeev Sanyal
- Exports have been a major driver of growth and they are now very significantly above the pre-COVID levels. But imports have also been very strong. Overall, GDP is 1.3% above where it was pre-pandemic: Principal Economic Advisor Sanjeev Sanyal
- The total consumption is just shy of where we were before the pandemic. Govt consumption has been reasonably strong but private consumption still lags: Principal Economic Advisor Sanjeev Sanyal
- Agriculture sector, not surprisingly, was least affected by lockdowns of various kinds. This sector grew in even 2020-21 & again in 2021-22. Industrial sector did go through a contraction & now it is about 4.1% above pre-pandemic levels: Principal Economic Advisor Sanjeev Sanyal
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