SBI slashes growth forecast to 10.4% amid rising lockdowns
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Given the current circumstances of lockdowns in almost all the states, the SBI on Friday revised its growth forecast to 10.4 per cent real GDP (earlier 11 per cent) and 14.3 per cent nominal GDP (earlier 15 per cent) in FY22.
The revision is based on the report by the economic research wing of the State Bank of India which suggests that the stringent curbs in mobility and lockdowns imposed in several Indian cities will dent the economic momentum resulting in a loss of Rs. 1.5 trillion in the country.
The report, authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India revealed that while the total loss is estimated at Rs 1.5 trillion- Maharashtra, Madhya Pradesh and Rajasthan account for 80 per cent.
From this, Maharashtra alone accounts for 54 per cent. Now with the lockdown imposed in Maharashtra till the month-end, the report indicates that Maharashtra's Rs 29.8 lakh crore economy will see an erosion of Rs 81,672 crore.
The 0.1 per cent point of GDP loss assessment observed by the report is based on the fact that this is only 15-20 per cent of these state's health expenditure Budget assuming half of the population in these states will get vaccinated by the Centre.
On the impact of the lockdowns on reverse migration of labour in Maharashtra, the report referred to the Western Railway's data between April 1 and April 12. It quoted that almost 4.32 lakh people have returned to their home states like UP, Bengal, Bihar, Assam and Odisha from Maharashtra.
The report also drew parallels with 1918 Spanish Glu and observed that this last deadly pandemic had more deaths in the later waves and emphasised that the focus should be on ramping up the vaccination efforts to thwart the resurgence of cases in India.
"India must vaccinate its population with the single-minded focus to achieve herd immunity and avoid any further waves," Soumya Kanti Ghosh asserted in the report.
It pegged the cost of vaccinating half the population of 13 major states at about 0.1 per cent of GDP. This, it said, was significantly lower than the 0.7 per cent of GDP, or 1.5 lakh crore, of the economic loss estimated due to existing restrictions.