Demand pushes up construction and manufacturing sectors in Q4FY21: Experts

However, the growth is largely driven by pent-up demand and holds ominous signs for the current quarter as the second wave is seen to have affected that very part of the economy

Construction, manufacturing, financial services and agriculture showed positive Gross Value Added (GVA) growths in the fourth quarter of last fiscal year, driven largely by pent-up demand in the first three and stupendous growth in output in the fourth, experts said.

However, the growth in the key sectors of construction and manufacturing driven largely by pent-up demand also holds ominous signs for the current quarter as the second wave of Covid-19 is seen to have affected that very part of the economy, the experts added.

Among the four, construction registered a healthy growth of 14.5 per cent in the January to March quarter of 2020-21 as consumers scrambled to complete their purchases that had been struck due to the extended lockdown and slow growth in the first three quarters.

The sharp slowdown in Covid cases post January and easing up of all restrictions also seemed to have built on the positive sentiment.

In the case of manufacturing, growth in the fourth quarter of FY21 rose to 6.9 per cent as against a negative growth of 4.2 per cent in the previous quarter as factories and industries started functioning in full steam.

“Despite a negative base, the positive growth in manufacturing is worth noting and is reflective of the momentum seen since the third quarter of Fy-21,” Madan Sabnavis, chief economist at CARE Ratings, told Business Standard.

He said in the case of financial services, the growth of 5.4 per cent seen in January to March quarter of 2020-21 over 4.9 per cent growth in the same quarter of previous financial year is largely due to year-end filings by lawyers, CAs and others.

In the case of agriculture and allied activities, data showed that growth at constant prices in the fourth quarter was down to 3.1 per cent as compared to 6.8 per cent during the comparable period in the previous financial year.

This was largely due to high base effect as production of agriculture commodities was robust in the kharif season.

However, at current prices, GVA of agriculture and allied activities in Q4 of 2020-21 was estimated at 5.1 per cent down from 14.8 per cent in the same period last year.

Kharif foodgrains production in the 2020-21 crop year (July to June) is estimated to be at a record 148.36 million tonnes, which is 3.16 per cent more than the previous year.

“This is where I feel the fear lies about agriculture growth in the first quarter of Fy-22 (April-June) because if COVID ravages through rural India, then growth and production both are bound to suffer,” Sabnavis of Care Ratings added.