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.
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“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.
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.
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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
