This is the command which will do the magic:
dd if=/dev/sda1 | gzip | rclone rcat db-disks:/path/to/backup.gzip
This command will read full disk contents and will stream it to gzip command for compression and which in turn stream to rclone. We are guiding rclone to rcat (remote cat) those contents to the desired remote path.
So, this command is seamlessly reading, compressing and writing to cloud on the fly without consuming any disk space locally.
Thank you so much! Worked like a charm.