Two important data sets have been brought out recently by MOSPI on second advance estimates of national income for 2020-21 and the first revised estimates on income, consumption, saving and capital formation for 2019-20, which includes revised estimates for GVA/GDP of FY19 and FY18 as well. Based on the fresh data available (revision in MCA data, fresh agri production data, final estimates of ASI data for FY18, fresh data from central, state govt, local bodies non-banking financial institutions etc), the GDP for FY20 has been revised down to 4.0% against 4.2% estimated earlier. Also GDP estimates for FY18 is revised downward to 6.8% from the earlier 7.0% and GDP for FY19 is moved up to 6.5% from the earlier estimates of 6.1%.
For the first 9 months of FY21, GDP at constant prices is to degrow at 10.4% (Q1 GDP revised to (-) 24.4 and Q2 revised to (-)7.3 with Q3 @ 0.4%), thereby taking the second advance estimates of GDP for FY21 at (-) 8.0 as against (-) 7.7% according to the first advanced estimates. It is also stated that the estimates are likely to undergo sharp revisions due to the likely unlocking of the impact of the series of measures taken up by the government as a follow up of Covid-19 pandemic. A firm interpretation of the data is therefore to wait till the receipt of final sets of data.
The second document on detailed statements for FY20 brings out interesting facts. We may take up three elements—manufacturing growth perspective, gross saving and GFCF trend. The revised estimates for the sectoral growth for FY20 clearly indicate that primary (agriculture, forestry, fishing, mining and quarrying) and secondary (manufacturing, electricity, gas, water supply, other utilities and construction) sectors have performed lower than previous estimates, while tertiary (services) sector have grown much ahead of the earlier estimates in FY20. The behaviour of Indian economy and for that matter the global economy during FY21 and CY20 is primarily influenced by Covid 19 pandemic. It may be kept in view that each component of production, consumption, saving and investment indicators of the economy were impacted by the spread of the virus and did represent the new normal phenomenon arising out of the pandemic. The indicators in FY20 were relatively free of these reverse factors except for the last month of the fiscal.
In the past 6 years (FY15 to FY20), data shows that GVA at basic prices has increased at a CAGR of 6.4%, the sectoral growth and share has been fluctuating. As regards secondary sector that influences significantly the growth of the commodity sector, its share has come down from 28% in FY15 to 25% in FY20, while the tertiary sector has enhanced its share from 52 to 59% with annual growth rate, though declining from 35% in FY15 has been 19% in FY19 before sliding to marginally negative zone in FY20. The manufacturing segment that occupies around 64% share in total secondary sector, (balance 30% by construction and 6% by electricity, gas and water supply) has grown with a respectable average growth rate of 8.3% till FY19 before sliding down to negative territory in FY20. The second advance estimates for FY21 indicates GVA in manufacturing to further degrow @ 8.4% with secondary sector marginally raising its share to 26.7% from 25.0% in FY20. This could be achieved due to the positive growth of 1.8% achieved by electricity,gas and water supply and other utilities segment, thanks to the speedy implementation of various schemes of GOI (Jal se Nal, Ujala, transportation of gas). The government has come out with a series of relief stimulus for the MSME sector, productivity linked incentive scheme for 13 important segments (including speciality steel) worth of `197 lakh till FY25.
The manufacturing sector is likely to be significantly benefitted by Atmanirbhar Bharat (AB) programme in railways, textile, oil and gas, defence sectors. The capital goods sector that has a weightage of 8.2% in IIP and Infra/construction segment with a weightage of 12.3% would be the major beneficiaries of the AB programme. The indigenous manufacturing capabilities would largely enable the segments to replace significant volume of imports of engineering goods containing special steel. When developed these units would become a part of the global value chain to attain a mark in the global markets of ASEAN and European markets.
Gross capital formation in manufacturing having an average growth rate of 6.7% during FY15 to FY19 slid down to negative territory in FY20. The private corporates (non-financial) holding an average share of 35% in gross fixed capital formation (GFCF), has created assets mostly in IPR products (chemicals and pharmaceuticals) and dwellings, but in respect of machinery and Equipment segment, the core area of manufacturing, its share in GFCF has come down from 55% to 44% over a period of last 8 years. This component must go up significantly with the implementation of various AB programmes.
—Views expressed are personal