The construction and financial, and real estate and professional services sectors have shown a negative growth of 8.6 percent and 1.5 percent respectively between April 2020 and March 2021 due the impact of COVID-19, official data released by the National Statistical Office (NSO) showed on May 31.
However, in Q3 and Q4 construction witnessed a rebound before the second wave of COVID-19. The construction sector saw a 14.5 percent growth in Q4 on a year-on-year basis. This reflects a significant proportion of the government's investment in infrastructure projects.
The financial, real estate and professional services sector saw a growth of 5.4 percent in Q4 on a year-on-year basis.
“The overall GDP growth numbers at -7.3 percent are on expected lines. In terms of the construction and financial, real estate and professional services sector, it is heartening to see the sectors rebounding in the third and fourth quarters. However, the overall annual growth has remained in the negative zone because of the impact of the first wave in the first and second quarters,” Samantak Das, chief economist and head of research, India at JLL.
Going forward, it is important to watch the impact of the second wave on the two sectors, he added.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
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Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
"The decline in GVA in construction and real estate activity was largely due to COVID-19 and along the expected lines. This is mainly because during the first wave in 2020 (since April), there was at least 75 percent drop in construction activity across the country. Developers remained more focussed on selling their ready stock rather than launching new projects," said Anuj Puri, chairman, ANAROCK Property Consultants.
"The construction sector has recorded a growth of 14.5 percent YoY which in our opinion, indicates the effect of government capital expenditure. What is pleasantly surprising is that the financial, real estate and other services also recorded a healthy growth of 5.4 percent in Q4FY21.
"While the second wave of COVID is likely to impact these segments in Q1FY22, it is clear that removal of lockdowns and movement restrictions by June should help the economy pick up the lost growth momentum by Q2/Q3FY22 unless we see a threat of a third wave etc. We, therefore, continue to hold our forecast of 10.0 percent GDP growth for FY22,” said Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.
Indian economy grew by 1.6 percent in the fourth quarter (January-March) of the financial year 2020-21 (Q4FY21), official data released by the National Statistical Office (NSO) showed on May 31. For the full financial year (FY21), the gross domestic product (GDP) growth contracted 7.3 percent.The Indian economy had contracted 24.4 percent in the first quarter of 2020-21 due to a harsh lockdown that exempted only manufacturing of essential goods and provision of essential services. A gradual easing of the lockdown began on June 8 but many service sector industries were ordered to stay shut. The April-June 2020 contraction was the deepest among the G20 nations.