Page 679 - ES 2020-21_Volume-1-2 [28-01-21]

306 Economic Survey 2020-21 Volume 2

& other services’ are estimated to contract by 21.41 per cent, 3.68 per cent and 0.82 per cent
respectively. It is pertinent to note that while the services sector contracted by over 20 per cent
in the first quarter (Q1) of FY 2020-21, the contraction narrowed to 11.4 per cent in the second
quarter (Q2) of FY 2020-21. This pace of recovery is broadly aligned with high frequency
indicators that point to a pick in economic momentum with the measured opening up of the
economy from June 2020.

Table 1: Services Sector Performance in India’s GVA
Share in
GVA (per Growth (per cent YoY)
cent)
2020-21 2018-19 2019-20 2020-21 2020-21 2020-21
Sector
(AE) (1st RE) (PE) (AE) (H1) Q1 Q2
Total Services
(Excluding construction) 54.3 7.7 5.5 – 8.8 – 15.9 – 20.6 – 11.4
Trade, hotels, transport,
communication & services 15.4 7.7 3.6 – 21.41 – 31.5 – 47.0 – 15.6
related to broadcasting
Financial, real estate & 22.2 6.8 4.6 – 0.82 – 6.8 – 5.3 – 8.1
professional services
Public administration,
defence & other services 16.7 9.4 10.0 – 3.68 – 11.3 – 10.3 – 12.2

Source: Ministry of Statistics and Programme Implementation.
Note: Shares are in current prices and growth in constant 2011-12 prices; RE: Revised Estimates. PE: Provisional
Estimates. AE: Advance Estimates
9.2 India’s services sector activity, which had contracted for five consecutive months since
March as the Covid-19 pandemic dented demand, has started to pick up since September 2020.
The IHS Markit India Services Business Activity Index also known as Services Purchasing
Managers’ Index (PMI), which was at an 85 month high of 57.5 in February, 2020, fell to its
lowest level of 5.4 in April, 2020 (Figure 1(a)). As mobility restrictions were lifted and business
resumed, Services PMI recovered sharply to 54.1 in October 2020. The index softened to 52.3
in December 2020, although a print above 50 still means expansion.

9.3 Similarly, rail freight traffic growth nosedived to (-) 35.3 per cent YoY in April 2020 before
rising back sharply to 15.5 per cent YoY in September 2020, (Figure 1(b)). The growth momentum
has continued till December 2020. Indian Railways loading was 118.13 million tonnes in December
2020, which is 8.54 per cent higher YoY compared to last year’s loading (108.84 million tonnes)
for the same period. It is worth mentioning that a number of concessions/ discounts are also being
given in Indian Railways to make Railways Freight movement very attractive.

9.4 Indian airlines were grounded for about two months between March and May, as the
government then implemented travel restrictions to curb the spread of the pandemic. Air
passenger traffic, thus, fell sharply in April 2020 (Figure 1(c)). Airlines were allowed to resume
domestic operations from late May in a calibrated manner. Domestic air passenger traffic has
been showing a gradual recovery since August on a monthly basis, although travel remains