×
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

GDP growth may drop to 10.4% in FY22 due to partial lockdowns, says SBI research

No impact of night curfew on economic activity in 8 states including Karnataka
Last Updated 23 April 2021, 05:28 IST

India's real gross domestic product (GDP) growth is likely to fall to 10.4 per cent from the current projection of 11 per cent due to partial/local and weekend lockdowns in almost all states, according to a State Bank of India research.

The total loss is estimated at Rs 1.5 lakh crore, of which Maharashtra, Madhya Pradesh and Rajasthan account for 80 per cent, with Maharashtra alone at 54 per cent. States that have no restrictions or have only night curfews, the monetary impact will not be seen. These states are Gujarat, Haryana, Karnataka, Kerala, Telangana and Uttar Pradesh which have imposed only a night curfew, while there are no restrictions in West Bengal and Himachal Pradesh, the SBI special research report said.

Maharashtra has put up a stringent lockdown among all states. Being the economically biggest and most industrialised state in India, this lockdown will have a huge impact on growth. Currently, it is estimated that Maharashtra will have a loss of around Rs 82,000 crore and this may increase if restrictions are further tightened.

Migration of labour is continuing unabated. According to the data provided by Western Railways (for the period of 01-12 April), almost 4.32 lakh people have returned to the states like UP, WB, Bihar, Assam, and Odisha from Maharashtra. Of 4.32 lakh, around 3.23 lakh reverse migrated to UP and Bihar alone. From Central Railways, estimates indicate that around 4.7 lakh reverse migrated to northern and eastern states from Maharashtra.

Maharashtra's share in India's GDP stands at 13.9 per cent.

Various economic indicators show a decline in activity since March. SBI business activity index shows a decline in activity in April with the latest reading of 86.3 for the week ended April 19, which is the lowest in five months. In November last year, it stood at 85.7. All the indicators have shown a dip with a maximum decline in Apple mobility, weekly food arrival at mandis, and RTO revenue collection.

All scheduled commercial banks recorded a decline in credit growth to a 59-year low of 5.6 per cent in 2020-21, compared to 6.1 per cent growth in 2019-20. On the other hand, deposits have increased to 11.4 per cent in FY21, compared to 7.9 per cent growth in FY20. In April-May of FY21, a huge monthly incremental increase in deposits was observed (particularly time deposits) as people had fewer options to spend due to nationwide lockdown. "This time also we expect large traction in time deposits as most of the states imposed partial lockdowns," SBI Research said.

ADVERTISEMENT
(Published 23 April 2021, 05:28 IST)

Follow us on

ADVERTISEMENT
ADVERTISEMENT