Business News: India’s GDP expected to grow by 1.3% in the March quarter.
The country’s GDP is expected to grow by 1.3% in the fourth quarter of 2020-21 and could contract by about 7.3% for the full financial year, according to an SBI “Ecowrap” research report.
The Office for National Statistics (ONS) will publish GDP estimates for the March 2021 quarter and provisional annual estimates for the year 2020-21 on May 31.
“We now expect GDP decline for the full year (FY 2020-21) to be around 7.3% (compared to our previous forecast of minus 7.4%),” he said.
The State Bank of India (SBI) has developed a “nowcasting model” with 41 high frequency indicators associated with industrial activity, services and the global economy in collaboration with the State Bank Institute of Leadership (SBIL), Calcutta.
The report says that, based on an estimate of 1.3% GDP growth, India would still be the fifth fastest growing country among the 25 nations that have released their GDP numbers so far.
He said that a likely consequence of any upward revision of the FY21 estimates is a concomitant decline in the FY22 GDP estimates. “Our estimates now indicate that there could be a nominal GDP loss of up to Rs 6 lakh crore during Q1 FY22 compared to Rs 11 crore loss of Rs 11 in Q1 FY21,” he said.
The loss of real GDP would be in the range of Rs 4-4.5 crore lakh and, therefore, real GDP growth would be in the range of 10-15% (versus the RBI forecast of 26.2%), he said.
The research report further stated that both deposits and credit of all banks declined in April and May. However, the deposit trend has changed from FY21. Deposits had increased by a staggering Rs 2.8 lakh crore in 2020-21; and in the current financial year, it has already increased by Rs 1 lakh crore until 7 May.
“The interesting point to note is that deposits showed alternating periods of expansion and contraction in FY22 in the first three fortnight,” he said.
According to the report, it is possible that such an expansion, followed by a contraction, could indicate family stress as people who get salary credit in the first fortnight withdraw it in the second fortnight for health care expenses. They are also stocking up on currency for precautionary reasons and an uncertain scenario, and the trend continues.