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%.
Key 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
