NEW DELHI: The contraction of first quarter GDP growth is likely to be much narrower than previously estimated, an SBI report said on Monday, but cautioned that rural recovery may not have much impact on GDP growth and called for remedial steps.
“We revisit our GDP growth estimates for the first quarter of FY21 (at lower than -20%) and now peg it at a much lower contraction, -16.5%, though with the relevant caveats in the current uncertain scenario,” Soumya Kanti Ghosh, group chief economic adviser at SBI, said in his report.
It said the per capita loss for the entire country is around Rs 27,000 with states like Tamil Nadu, Gujarat, Telangana, Delhi, Haryana and Goa exhibiting a loss of more than Rs 40,000 per person in fiscal year 2021. “However, rural recovery is unlikely to support such pace in subsequent quarters as overall the per capita monthly expenditure in urban areas is at least 1.8x of rural areas, and rural wage growth in real terms might still be negative,” the report pointed out.

The National Statistical Office will release the GDP data for the first quarter of 2020-21 on August 31 and most economists have estimated that there will be a sharp contraction due to the impact of the strict lockdown imposed in late March to prevent the spread of the coronavirus. The report points to the worsening infection situation in the rural areas and the impact it is likely to have on the economy. The report estimated total GSDP loss due to Covid at 16.8%. State-wise analysis indicated that the top 10 accounted for 73.8% of total GDP loss with Maharashtra contributing 14.2%.

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