Slowdown blues: Services sector only bright spot for GVA growth rate

While the services and construction sectors grew at a much slower pace in the July-September quarter of this fiscal year (Q2FY20) compared to the same period last year, these were the only bright spots for the gross value added (GVA) growth rate.

GVA for the “public administration, defence and other services” sector, at 2011-12 base year, grew by a staggering 11.6 per cent in Q2FY20 as compared to a growth rate of 8.6 per cent for the same period last year.

“The key indicator of this sector — Union government revenue expenditure net of interest payments excluding subsidies — grew by 33.9 per cent as compared to 22.2 per cent for the same period last year,” said an official statement.

“Excluding defence, public administration and other services, the GVA growth would have been merely 2.8 per cent. Beneath the headline numbers, the divergence between GDP (gross domestic product) and GVA reflects stark realities,” said Soumya Kanti Ghosh, chief economic advisor with State Bank of India.

For the construction sector, quarterly GVA at basic prices for Q2 grew by 3.3 per cent as compared to a growth of 8.5 per cent for the same period last year. For ‘trade, hotels, transport, communication and broadcasting services’, GVA grew by 4.8 per cent as compared to a growth of 6.9 per cent in Q2FY19.

For the ‘electricity, gas, water supply and other utility services’ sector, GVA grew by 3.6 per cent against 8.7 per cent. For ‘financial, real estate and professional services’, GVA saw a 5.8 per cent rise compared to 7 per cent for the same period last year.