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State of the Economy 2020-21: A Macro View 23
irrigation via PM Krishi Sinchai Yojana, micro-irrigation scheme, promoting economies of
scale through FPOs, and institutionalizing e-NAM (Electronic national agricultural market),
and promotion of agricultural mechanization through subsidies and custom hiring centres,
have contributed to nourishing a vibrant agricultural sector, which remains a silver lining to
India’s growth story of FY 2020-21.
1.28 A palpable V-shaped recovery in industrial production was observed over the year.
Manufacturing rebounded and industrial value started to normalize. Headwinds, however,
lingered on. The index of eight core industries, which make up around 40 per cent of the index,
registered a growth of (-) 2.6 per cent in November, 2020 as compared to a growth of 0.7
per cent in November, 2019 and (-) 0.9 per cent in October, 2020 (Figure 24). Consequently,
IIP, after registering positive growth in October 2020 slipped back into contractionary zone
in November, 2020 (Figure 25). PMI Manufacturing, however, continued to remain in
expansionary zone in December 2020. Resuscitating steel consumption reinforced acceleration
in construction sector, propping up employment as economy unlocked. The housing market, a
key forward linkage sector for steel consumption, saw gradual resurgence from its Q1: 2020-
21 trough. Electricity sector retained its momentum with power consumption registering
positive YoY growth since September, 2020.
Figure 24: Growth in Core Index Figure 25: Growth in IIP
Coal Crude Oil Mining Manufacturing Electricity IIP
Natural Gas Petroleum Ref. Products 10
Fertilizers Steel
Cement Electricity 0
Overall Index
10 -10
0 -20
cent -30
Growth (%) -10 Per -40
-20
-30 -50
-60
-40 -70
Jan/20 Feb/20 Mar/20 Apr/20 May/20 Jun/20 Jul/20 Aug/20 Sep/20 Oct/20 Nov/20 Jan/20 Feb/20 Mar/20 Apr/20 May/20 Jun/20 Jul/20 Aug/20 Sep/20 Oct/20 Nov/20
Source: MoSPI, DPIIT
1.29 Revitalized inter and intra-state movement along with a sustained spurt in industrial and
commercial activity heralded the economy’s returning to normalcy. E-way bills, electronic
toll collection, rail freight and port cargo traffic not just recovered but surpassed previous year
levels in Q3: 2020-21, while rail passenger earnings and domestic aviation witnessed a steady
recovery (Figures 26 and 27). Indian services sector sustained its recovery from the pandemic
driven declines with PMI Services output and new business rising for the third straight month
in December.