India’s GDP To Contract By 16.5 Percent In Q1 FY21 From 20 Percent In May: SBI Report


State Bank of India expects India’s GDP to contract 16.5 percent in the April-June quarter from the earlier expected 20 percent. In its earlier report in May, Ecowrap had estimated Q1 FY21 GDP contraction at over 20 percent and now pegs it at much lower “though with the relevant caveats in the current uncertain scenario.”

It said degrowth in corporate GVA (better than expected results of some financial and non-financial companies) has been significantly better than revenue degrowth in Q1 FY21 as far as the results of the listed companies are concerned.

So far, around 1,000 listed entities have announced their results for the first quarter. The results indicate more than 25 percent decline in topline and more than 55 percent decline in bottomline.

However, it is interesting to mention that the decline in corporate GVA (gross value added) is only 14.1 percent, it said.

“In principle, revenue decline of listed companies has been far outstripped by cost rationalisation thereby not impacting margins,” the report said.

It further said over the months of July and August, coronavirus has now significantly penetrated the rural areas. The percentage of cases in rural districts to total new cases has risen to 54 percent in August.

Also, the number of rural districts with less than 10 cases have reduced significantly. Andhra Pradesh and Maharashtra have been impacted more severely with increasing coronavirus penetration in rural areas.

“These districts contribute mostly around 2-4 percent of GSDP (gross state domestic product) of their respective states, indicating that cases are penetrating deep rural hinterlands,” the report noted.

The report estimates total (GSDP) loss due to COVID-19 to be at 16.8 percent of GSDP.

State-wise analysis indicates that top 10 states accounted for 73.8 percent of total GDP loss, with Maharashtra contributing 14.2 percent of total loss followed by Tamil Nadu (9.2 percent) and Uttar Pradesh (8.2 percent), it said.

Subsequently, the per capita loss for all India is around Rs 27,000 with states like Tamil Nadu, Gujarat, Telangana, Delhi, Haryana, Goa, exhibiting loss of more than Rs 40,000 per person in FY21, the report stated.