As per the SBI Research Report ‘Ecowrap’, India’s GDP may grow at 1.3 per cent in the fourth quarter of 2020-21 and is likely to witness around 7.3 per cent contraction for the full financial year.
The Final Results for GDP for the March 2021 quarter and provisional annual estimates for the year 2020-21 will be released by the e-National Statistical Office (NSO) on May 31.
“Based on our ‘nowcasting model’, the forecasted GDP growth for Q4 would be around 1.3 per cent (with downward bias) as against NSO (National Statistical Office) projection of a negative (-)1 percent,” the research report said.
“We now expect GDP decline for the full year (FY 2020-21) to be around 7.3 per cent (compared to our earlier prediction of minus 7.4 percent),” said the report.
The report said that if going by forecasting 1.3 per cent GDP growth, India would still be the fifth-fastest-growing country amongst other 25 nations that have come up with their GDP numbers so far.
“Our estimates now indicate that there might be a nominal GDP loss of up to Rs 6 lakh crore during Q1 FY22 as compared to the loss of Rs 11 lakh crore in Q1 FY21,” it said.
Further, it said that the real GDP loss would be around a range of Rs 4-4.5 lakh crore and, hence, real GDP growth would lie in the range of 10-15 per cent (not likely to be the RBI forecast of 26.2 per cent).
The research report emphasized that both the banks’ deposits and credit went down in April and May. However, the trend in deposits set on another route from FY21.
Deposits made in 2020-21 amounted to Rs 2.8 lakh crore and in the current financial year, it has already seen an additional Rs 1 lakh crore as of May 7.
“The interesting point to note is that deposits have shown alternate periods of expansion and contraction in FY22 in the first three fortnights,” it said.
According to the report, such expansion, followed by contraction, can be an indication of household stress. As salaried people credit it in the first fortnight withdraws the salary in the second fortnight for health expenses.