India's GDP recovery led by manufacturing, services sectors: SBI

The Gross Domestic Product (GDP) recovery has been led by the manufacturing and services sectors, according to a State Bank of India (SBI) report.

The nominal GDP loss narrowed down to Rs 2 lakh crore in Q2 FY21 from Rs 11.1 lakh crore in Q1, as per the SBI report titled 'Six months after unlock' published by the bank's economic research department.

"The recovery in GDP has been led by manufacturing and the largest component of the services sector - trade, hotels, transport, and communication. This is quite obvious given the movement of freight traffic in Q2," SBI said in its report.

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Attributing the GDP recovery to the manufacturing and services sectors, the bank said the sector had minimised its losses "by 91% from Q1, services sector by 43% and trade sub-segment by 80%."

"During November 20, business activity index shows persistent modest improvement in economic momentum," the report noted, adding that the weekly food arrival data for November demonstrated a rise in the arrival of cereals and vegetables to some extent. However, pulses and fruits witnessed a decline in arrival following a modest improvement in October, it said.

GST revenue improves

The report stated that the GST revenue improved the trend since September (2020). The GST revenue in November, it said, was 1.4% higher than the GST revenues in the year-earlier period.

"The positive trend which started from September 20 has sustained," the report mentioned.

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However, State Market borrowings rose 46% than in the same period last year, indicating the persisting stress in their revenues, it said.

Meanwhile, India's agri and metal exports also bucked the trend and stayed upbeat. Pharma exports also stayed positive, but imports showed a broad-based decline, the report noted.

Talking about the country's foreign exchange reserves, the bank said India has accumulated huge foreign exchange reserves and excluding gold "now India has the 4th largest foreign currency reserves."

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Citing corporate data, the report said that there has been a jump in the registration of food companies during the COVID-19 pandemic.

"Five States i.e., Maharashtra, Delhi, UP, Karnataka, and Telangana accounted for more than 50% of the new-registered companies," it stated.

In manufacturing, sectors such as food, metal & chemicals, and machinery and equipment reported major registrations, the report added.

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