The Economic Survey 2020-21 which was presented in the Parliament by the Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman, predicts a V-shaped recovery in the economy.
Based on key indicators such as Services Purchasing Managers’ Index, Air passenger traffic, rail freight traffic, port traffic, foreign tourist arrivals and foreign exchange, the Survey observes that contraction due to Covid has bottomed out.
“India’s Services sector witnessed a significant set-back during the COVID-19 pandemic mandated lockdown, owing to its contact-intensive nature. The sector contracted by nearly 16% during the first half of the financial year 2020-21”, the Survey observed.
It says now domestic passenger air traffic is also recovering gradually on a monthly basis, although overall demand remains subdued in comparison to last year. The Survey expects the contact intensive service sectors to witness revival with the ongoing vaccination drive.
Other strong positive signs include Foreign Direct Investment (FDI). According to the Survey, despite the disruptions being witnessed globally, the FDI equity inflows into India’s services sector grew robustly by 34% Y-o-Y during April-September 2020 to reach US$ 23.6 billion.
This FDI growth was led by strong inflows into Computer Software & Hardware sub-sector, where FDI inflows grew by over 336% during the same period.
“The High growth in FDI inflows was also present in sub-sectors such as Retail Trading, Agricultural Services and Education”, it added.