India's Q1GDP For FY21 May Squeeze By 40 Percent: SBI Research

India has been under lockdown for over two months now, and as we enter lockdown 4.0, it is essential we take a look at the impact of COVID-19 on India’s economy. According to SBI Report Ecowrap, when India entered the first phase of the lockdown, the country’s GDP estimate was 2.6 percent, and since then it has progressively went negative 4.7 percent with nominal GDP witnessing a contraction. But now with lockdown 4.0 levied with limited restrictions, the government has given permission for offices and businesses to start operations with few guidelines. This will help the states improve their GSDP, which in total accounted for a loss of Rs.30.3 lakh crore

loss due to COVID-19, which is around 13.5 percent of total GSDP. The loss is maximum in red zones (around 50 percent), and the combined loss for orange and red zones accounts to nearly 90 percent of the total loss.

The research also estimates that the Q4GDP for FY20 could at 1.2 percent, with FY20 GDP numbers at 4.2 percent. Also the report’s state-wise analysis indicates that top 10 states accounted for 75 percent of total GDP loss with Maharashtra contributing 15.6 percent of total loss; Tamil Nadu (9.4 percent) and Gujarat (8.6 percent) follows it. Another interesting finding of the report is that it estimates real GVA growth to be at -3.1 percent in FY21 and real GDP growth at -6.8 percent in FY21.

The country could even face humongous loss in Q1GDP for FY21 which could even exceed 40 percent. However the second quarter GDP will see smart recovery and account to 7.1 percent if we sustain the demand. With SBI Research predicting that the number of COVID-19 patients will increase drastically towards the end of June, 2020, it is challenging to see how the government balances ‘Jaan bhi, Jahan bhi’! With easing up of restrictions, it is our responsibility as citizens to act more responsibly and ensure we help our country attain the financial strength in the coming days.