22nd September 2021

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SBI Ecowrap report on Indian Economy

The Indian economy could report a 16.5% contraction in the April-June quarter of fiscal year 21, compared to a previously expected 20% contraction, due to the decrease in corporate GVA, thanks to the better than expected results of certain financial and non-financial activities companies, was significantly better than the decline in revenue in the first quarter of fiscal year 21, said economists at India’s largest public sector bank, the State Bank of India (SBI).

“In May, we indicated that GDP growth in the first quarter of the fiscal year 21 would show a sharp drop of at least more than 30%. However, the current situation justifies us to review our GDP growth … In principle, the fall in the income of listed companies has According to our estimates, the fall in real GDP in the first quarter of the year-21 would now be around -16, 5%, ”

wrote Soumya Kanti Ghosh, SBI’s chief economic adviser. in his latest Ecowrap report, dated August 17.

The government is expected to release GDP data for the first quarter of fiscal year 21 on August 31. Based on the Composite Leading Indicator (CLI), which is a basket of 41 leading economic indicators, Ghosh infers that economic activity is showing early signs of reversal.

“Of the 41 high-frequency leading indicators, 11 show a significant decline in the first quarter of the fiscal year21, with the exception of domestic tractor sales, bitumen consumption, and ASCB’s bank deposits … Based on the main year-on-year performance indicators, we also expect gross value added (GVA) to be between –14.5% and -16.5% in the first quarter of the year -21 ”,

soumya kanti ghosh, sbi

Data released by the government last week showed that Indian industrial production contracted sharply for the fourth consecutive month in June, but at a slower pace than in May, indicating a gradual process of normalization in activity. manufacturing.

Data provided by the National Statistics Office shows that the industrial production index (IIP) contracted 16.6 percent in June from 34 percent in May. During the June quarter, the IIP contracted by 35.3%, which could have a major impact on GDP growth for that quarter. They expect GDP growth to contract by 15.2% year-on-year in the second quarter and by -4.2% on average in the second half of 2020, leading to global growth of -5.0% in 2020.

GDP by state

According to Ghosh, as the Covid-19 epidemic spreads through the densely populated rural areas of India, the four quarters of fiscal year 21 are likely to show negative real GDP growth, while annual growth slows. it could be double digits.

Using the bottom-up approach, Ghosh estimated the loss of production in each state based on the level of activity which is then added together for the overall loss of GDP.

“We have estimated the total GSDP loss due to Covid-19 for states to be Rs 38.0 lakh crore, or 16.9% of the total GSDP. State-by-state analysis indicates that the top 10 states accounted for 73.8% of total GDP loss with Maharashtra, contributing 14.2% of the total loss, followed by Tamil Nadu (9.2%) and Uttar Pradesh (8.2%). These top 10 states accounted for about 81% of the total confirmed Covid-19 cases in India … Subsequently, the per capita loss for all of India is around 27,000 rupees with states like Tamil Nadu, Gujarat, Telangana, Delhi, Haryana, Goa, etc. registering a loss of more than Rs 40,000 per person in fiscal year 21, ”

soumya kanti ghosh, sbi

In the last 15 days, India has reported 10 lakh cases of Covid-19. India now accounts for 10.40 per cent of all active cases globally (one in every 10 active cases), and 6.50 per cent of all deaths (one in every 15). India has recorded 57,981 coronavirus cases in the past 24 hours, taking its total to 2,651,290, data provided by Health Ministry shows. With over 961 fatalities reported on Sunday, the country’s death toll has surged to 51,079.

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