NEW DELHI: India’s economy may see a lower contraction of 16.5 per cent in the April-June quarter of FY21 as against previously expected contraction of 20 per cent, a research report by State Bank of India (SBI) —Ecowrap noted. The revision comes against the backdrop of better-than-expected results of some financial and non-financial companies as far as listed companies are concerned.
“In May, we had indicated that the Q1 FY21 GDP growth will exhibit a sharp decline at least in excess of 30 per cent. However, the current situation warrants us to revisit our GDP growth estimates for Q1 FY21, though with the relevant caveats in the current uncertain scenario,” said economists at SBI.
“Specifically, the degrowth in corporate GVA, courtesy better-than-expected results of some financial and non-financial companies, has been significantly better than revenue degrowth in Q1FY21. In principle, revenue decline of listed companies has been far outstripped by cost rationalization thereby not impacting margins,” it added.
The report also pointed out that the “ugly part Covid-19” on economic growth is that all the four quarters of FY21 is estimated to exhibit negative real GDP growth and the decline of full year growth will likely be in double digits. For the full financial year, SBI pegs India’s GDP contraction has already crossed the (-) 6.8 per cent mark, significantly higher than previous estimate (made during first phase of lockdown) of 2.6 per cent fall.
State-wise analysis indicates that top 10 states accounted for 73.8 per cent of total GDP loss. Subsequently, the per capita loss for India is around Rs 27,000 with states like Tamil Nadu, Gujarat, Telangana, Delhi, Haryana and Goa, exhibiting loss of more than Rs 40,000 per person in FY21.
Another worrying factor, it said, is the fast penetration of Covid-19 in rural India. The percentage of cases in rural districts to total new cases has risen to 54 per cent in August.