HP’s economy to shrink by 6.2% this fiscal: Economic Survey
Hit by the Covid-19 pandemic, Himachal Pradesh’s economy is likely to contract by 6.2% in the current fiscal, according to the Economic Survey, 2020-21, presented in the assembly by chief minister Jai Ram Thakur.
The hill state went into strict lockdown in March last year to curb the spread of coronavirus, shutting down all economic activity.
The economy had grown by 8.9% in the previous year.
The per capita income at current prices is estimated to drop by 3.7% to ₹1,83,286 as compared to the estimated ₹1,90,407 in 2019-20.
The state budget will be presented on Saturday.
Dip in agriculture and allied sectors
The survey projected that growth in the agriculture and livestock sectors is set to decline by 3.1% due to a decrease of 43% in horticulture production.
The share of agriculture and allied sectors is key as they support 60% of the population in the gross value added (GVA) of the state at current prices that has declined from 15.89% in 2015-16 to 13.62% in 2020-21. This is on account of the relatively higher growth performance of non-agricultural sectors due to structural changes taking place in the economy and is in line with national and international trends.
The sector registered a positive growth of 18.3% in 2019-20 at constant (2011-12) prices with a GVA of ₹10,583 crore as compared to ₹8,949 crore for 2018-19.
81% contraction in tourism sector
One of the hardest hit sectors by the pandemic has been tourism. It saw a contraction of 81.33% in foreign and domestic tourist arrivals in 2020. The trade, hotel and restaurant sector showed a contraction of 9.2% during 2020-21 as against a growth of 4.6% in 2019-20. The transport sector too showed a negative growth of 28% during the current financial year as against 5.6% growth during 2018-19.
The survey says that the state government played a proactive role and took many steps to mitigate the Covid-19 effect.
Negative growth in industrial sector
The manufacturing sector showed a contraction of 14.2% during 2020-21 as against a positive growth rate of 0.3% last year.
The mining and quarrying sector showed a negative growth of 18.4%.
According to estimates for 2019-20 at constant (2011-12) prices, the GVA of this secondary sector is estimated at ₹53,498 crore against ₹7,53,456 crore in 2018-19. The contribution of the manufacturing sector in GVA is expected to drop by 26.94% in 2020-21. The construction sector growth shrunk by 11.5%.
Inflation has been moderate
The inflation has been moderate in the state since 2014. During April-December, 2020, the consumer price index combined (CPI-C) was 5.3% as compared to 2.5% for the same period in 2019-20. CPI-Rural and CPI-Urban indices were 4.8% and 7.6%, respectively, against 2% and 4.7% last year.
Fiscal development and employment
The revenue receipts for 2020-21 are estimated to be 24.56% of the GSDP compared to 19.86% last year. Tax revenue is estimated to be 9.81%. Non-tax revenue shows a marginal increase to 1.54%. Fiscal deficit is estimated to be 4.65%.
The survey highlights the periodic labour force survey (PLFS) report for 2018-19. This shows that the LFS rate has increased from 49.1% in 2017-18 to 52.8% in 2018-19. There has been a considerable increase in the female workforce participation rate in the state from 37.9% 2017-18 to 44.6% in 2018-19.