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India’s GDP growth seen at 1.2 pc for Q4 FY20, Says SBI report

The fourth quarter GDP growth number for FY20 will be announced by the NSO on May 29.

As per recent SBI’s research report, India’s gross domestic product (GDP) is estimated to have grown at 1.2 per cent in the last quarter of the previous fiscal as economic activity came to a standstill in the last week of March due to the nationwide lockdown to contain spread of COVID-19, the report remarked.

Following the SBI’s research report – Ecowrap – the GDP growth is likely to be 4.2 per cent for FY20 and (-) 6.8 per cent for FY21. However, The fourth quarter GDP growth number for FY20 will be announced by the National Statistical Office (NSO) on May 29.

Read Also, Moody’s Investors Service sees India’s economic growth at ‘zero’ in FY21

In the third quarter of FY20, GDP growth slipped to a nearly seven-year low of 4.7 per cent. In Q1 and Q2 of FY20, GDP growth was 5.1 per cent and 5.6 per cent, respectively. The research report has been remarked that, “Q4 (FY20) GDP growth would be around 1.2 per cent as the economic activity in the last seven days of March month was completely suspended due to the nationwide lockdown“.

Also, It sees a loss of at least Rs 1.4 lakh crore during those seven days of lockdown. “Subsequently, the annual FY20 GDP growth would be around 4.2 per cent as compared to 5 per cent as it was projected earlier,” it said.

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Notably, It estimates FY21 GDP growth to be around (-) 6.8 per cent and gross value added (GVA) growth would be nearly (-) 3.1 per cent. The loss is maximum (around 50 per cent) in red zones and where almost all the big districts of the country are located. The combined loss of orange and red zones is around 90 per cent of total loss.

Thus, State-wise analysis indicates that top 10 states accounted for 75 per cent of total GDP loss with Maharashtra contributing 15.6 per cent of total loss followed by Tamil Nadu (9.4 per cent) and Gujarat (8.6 per cent). These three states also have the largest number of confirmed COVID-19 cases in the country. The report further stated that COVID-19 cases in the country could peak anytime in the last week of June.

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The report, “Based on the current 7-day moving average of new cases witnessed in the country, we believe that new cases are likely to peak somewhere in the last week of June, beginning June 20,” the report remarked. Following that, the new cases are expected to witness steep fall till the beginning of August after which it is expected to gradually reduce to flatten by mid-September.

Read Also, GDP growth touches 6 year low

The concerned report, however, stated the estimates are purely based on an assessment of current trends that can quickly change given the cyclonic disaster in West Bengal and the continued return of migrant labourers. As per health ministry figure, The number of COVID-19 cases in the country stood at 1,45,380.

Despite all of this, Moody’s Investors Service on May 8 stated it estimates India’s GDP growth to hit “zero” in Financial Year 2021 (FY21) and pointed to a wide fiscal deficit, high government debt, weak social and physical infrastructure, and a fragile financial sector.

(Author: Trilok Singh is with CEO here).

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