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India’s GDP growth may fall to 1.1% in FY21: SBI Ecowrap report

SBI Economic growth may fall

On April 16, 2020 The State Bank of India’s (SBI) Ecowrap report estimated India’s Gross Domestic Product (GDP) growth may fall to 1.1% in FY21 from its earlier projections of 2.6%, with the likelihood of 1st quarter growth contracting 6% or more and 2nd quarter witnessing no growth due to the impact of the coronavirus pandemic outbreak. The FY20 GDP growth has been revised from 5% to 4.1%.SBI Economic growth may fallKey Points

i.Due to the extension of lockdown till May 3, it has estimated overall loss for FY21 around Rs 12.1 lakh crore or 6% of nominal gross value added (GVA) taking the nominal GVA growth for the entire year to be around 4.2% & the nominal GDP is projected at 4.2%.

ii.The net tax revenue will have a shortfall of at least around Rs 4.12 lakh crores, and revenue shortfall for states will be Rs 1.32 lakh crores.The revised fiscal deficit will be at 5.7% of GDP from the budget estimate of 3.5% in FY21 and after taking into account only the current EBR (Extra Budgetary Resources), the deficit rises to 6.6% of GDP.

iii.The fiscal deficit of the States will rise to 3.5%  of GDP from the budget estimate of  2% in FY21. The number of EBRs will rise as the government seeks to mobilize resources through unconventional means like COVID bonds, deficit monetization among others & the consolidated fiscal deficit may rise to 10% of GDP on an unchanged EBR.

iv.The nominal merchandise exports to decline by upto 16% in FY 21, which translates into an output loss of USD 50 billion (Rs 1.86 lakh crore in rupee terms).

About SBI:
Headquarters– Mumbai, Maharashtra
Chairman– Rajnish Kumar