NEW DELHI: Two more agencies have downgraded India’s growth forecasts for FY22 following the dramatic rise in Covid-19 cases over the past few weeks which has stoked concerns over India’s economic recovery.
The economic research wing of State Bank of India has cut its real GDP growth forecast to 10.4 per cent from 11 per cent for the financial year ending in March 2022 (FY22).
Similarly, India Ratings and Research now forecasts India’s GDP growth rate to be 10.1 per cent as against 10.4 per cent earlier.
Other global and domestic brokerages including Nomura, JP Morgan, UBS, Care Ratings, Citi Bank, and S&P Ratings have all revised their growth projections for India downwards.
Recently, RBI Governor Shaktikanta Das had also flagged the rising Covid-19 cases as the biggest impediment to economic recovery.
According to SBI chief economic advisor Soumya Kanti Ghosh, faster vaccination is cheaper on the economy than a complete lockdown.
“The cost of inoculating half the populace of 13 major states would be approx. 0.1 per cent of the GDP (Gross Domestic Product) or 15-20 per cent of states’ health budget, presuming that the Centre would cover the cost of vaccination for the other half of this population,” Ghosh said, adding that this is significantly lower than the economic loss in GDP due to a lockdown already at 0.7 per cent of GDP.
It further estimated that the total monetary impact (total loss) of the current lockdown in various states is Rs 1.5 lakh crore. Of this, Maharashtra, Madhya Pradesh, and Rajasthan account for 80 per cent.
“Maharashtra has put up a stringent lockdown. Being economically the biggest and most industrialised state in India, this lockdown will have a huge impact on growth.
Currently, we estimate loss of around Rs 82,000 crore for Maharashtra (which accounts for 54 per cent of the total loss) which will definitely increase if restrictions are further tightened,” Ghosh said.
With 15 of its districts under weekend lockdown, the economic impact on Madhya Pradesh is seen at Rs 21,712 crore and that of Rajasthan, which is also under lockdown till May 3, is Rs 17,237 crore.
10.4% estimated GDP growth in FY22 as per SBI Research
10.1% estimated GDP growth in FY22 as per Ind-Ra