Covid-19 impact: GDP growth may plunge to 1.1% in FY21, says SBI report

India’s GDP growth may slide to 1.1 per cent in the current fiscal year, on account of the impact of Covid-19 outbreak on the economy, a research report by SBI said on Thursday.
 

The economic growth rate during 2019-20 is estimated to come down to 4.1 per cent from 5 per cent projected by several agencies before the outbreak of deadly virus, which affected more than 2 million persons around the world and took lives of over 130,000 people.
 

To check the spread of Covid-19, the government has decided to extend the lockdown to May 3, with some relaxations for specified sectors.
 

According to the SBI Ecowrap report, the extension of the lockdown would result in economic loss of Rs 21.1 trillion or 6 per cent of the nominal Gross Value Added (GVA).

“With the lockdown being extended till May 3 and simultaneously government providing some relaxations from April 20, we estimate the overall loss for FY21 around Rs 12.1 trillion/6 per cent of nominal GVA taking the nominal GVA growth for entire year to be around 4.2 per cent.
 

“Nominal GDP for FY21 could be lower/closer to 4.2 per cent, as there is a strong possibility of subsidies outstripping tax collections. However, taking nominal GDP growth at 4.2 per cent, the real GDP growth for FY21 would be around 1.1 per cent," said the report.
 

The lockdown, the report said, will have a significant impact on several macroeconomic parameters.
 

Quoting PLFS survey 2017-18, the report said, there are 37.3 crore workers engaged as self-employed, regular and casual workers, with share of self employed at 52 per cent, casual worker at 25 per cent and the rest engaged as regular wage earners and others.