Q1 GDP | Trade, hotel and transport segment clocks 34.3% growth in Q1

Although the sector registered growth, it continues to be below the pre-pandemic levels. The high growth is in comparison with the April-June 2020 quarter last year when the sector reported a massive contraction of 48.1 percent in the April June quarter of the last fiscal.

The sector did manage to narrow the contraction in the final quarter of 2020-21 by shrinking 2.3 percent.

In the first quarter of 2019-20, the sector had posted a growth of 3.5 percent.

According to the NSO data released on Tuesday, the gross value added (GVA) from trade, hotel, transport, communication & services related to broadcasting grew by 34.3 percent at constant prices in the April-June quarter against a 18.8 percent year-on-year rise in the overall real GVA for the second quarter.

GVA at current prices for trade, hotel, transport, communication and services related to broadcasting rose 43.7 percent year-on-year during the first quarter against a 26.5  percent growth for the overall nominal GVA.

Meanwhile, Financial, Real Estate and Professional Services rose by 3.7 percent in the first quarter of FY22.

Public Administration, Defence and other services reported a growth of 5.8 percent in Q1. 

Electricity, Gas, Water Supply & Other Utility Services surpassed the pre-covid levels during Q1 of FY 2020-21 registering a growth of 14.3 percent. It had contracted 9.9 percent during the April June quarter of 2020-21.

"Services is the largest component of our economy and is still struggling. Despite base effect, unlike industry, it grew only 11.4% in 1QFY22. However, its largest component trade, hotels, transport and communication did better than other components and grew at 34.3% in 1QFY22 despite majority of its activities being contact intensive in nature. The other two components of services sector namely - financial, real estate & professional services and public administration clocked a growth of 3.7% and 5.8% respectively in 1QFY22," said Sunil Kumar Sinha, Principal Economist, India Ratings & Research.

The hospitality industry has been the worst impacted due to the COVID-19 pandemic and related lockdown that forced people to stay at home. Furthermore, the restrictions also resulted in a drop in foreign and domestic travel.

The travel and hospitality, a high contact sector, had barely survived the first wave of the novel coronavirus pandemic is again staring at another tough year despite the vaccination drive.

Just when the sector had started trotting back to revival mode, the uncertainty around the second wave again led to remote working and people stepped inside, avoiding any unnecessary travel. Thus, the little recovery that the sector had made post pandemic has started to recede once again. To aid the sector in its recovery, the Centre on March 31 had extended the scope of the Rs 3 lakh crore ECLGS to Hospitality, Travel and Tourism, Leisure, and Sporting sectors.

According to a report by rating agency ICRA, the second wave has derailed the industry's recovery by 6-8 months, and a return to the pre-pandemic levels is now expected by the financial year 2023-24.

According to World Travel and Tourism (WTTC), the tourism industry contributed 9 percent to India's GDP in 2019.  WTTC also estimated a revenue loss of $17 billion for India in 2020 alone.