Industry

GDP likely grew by 1.3% in Q4 FY21: SBI research

Palakkad, Kerala, 27/04/2018: A migrant devanga community member engaged in weaving at a traditional shuttle loom at Peruvambu in Palakkad. The Indian weaving industry employs a large section of the Indian population yet it is considered as a failing industry. Though this ancient industry is experiencing a bad phase, a large market for weaving products still exist both in the international and domestic market. The manufacturing of the weaving products makes a remarkable contribution to the national GDP and even in the exports revenue, making this industry the largest provider of rural work force after agriculture. Handloom weaving and cloth making had been prevalent in India as a traditional cottage industry in almost all states from time immemorial. Almost all the states are engaged in the production of unique varieties of traditional weaving products. The liberalization of the international trade coupled with change in the reforms of domestic economy have made affected the weaving industry of India negatively. The changing scenario of the weaving industry in the country has reflected in Kerala also. Photo: K. K. Mustafah

Palakkad, Kerala, 27/04/2018: A migrant devanga community member engaged in weaving at a traditional shuttle loom at Peruvambu in Palakkad. The Indian weaving industry employs a large section of the Indian population yet it is considered as a failing industry. Though this ancient industry is experiencing a bad phase, a large market for weaving products still exist both in the international and domestic market. The manufacturing of the weaving products makes a remarkable contribution to the national GDP and even in the exports revenue, making this industry the largest provider of rural work force after agriculture. Handloom weaving and cloth making had been prevalent in India as a traditional cottage industry in almost all states from time immemorial. Almost all the states are engaged in the production of unique varieties of traditional weaving products. The liberalization of the international trade coupled with change in the reforms of domestic economy have made affected the weaving industry of India negatively. The changing scenario of the weaving industry in the country has reflected in Kerala also. Photo: K. K. Mustafah

India’s GDP is likely to have grown at 1.3% in the fourth quarter of 2020-21 and may have contracted by about 7.3% for the full financial year, according to an SBI research report ‘Ecowrap’.

The National Statistical Office (NSO) will release the GDP estimates for the March 2021 quarter and provisional annual estimates for the year 2020-21 on May 31.

“Based on our ‘nowcasting model’, the forecasted GDP growth for Q4 would be around 1.3% (with downward bias),” the lender’s economics research team said in the report.

“We now expect GDP decline for the full year (FY 2020-21) to be around 7.3% (compared to our earlier prediction of minus 7.4%),” the research team said.

State Bank of India (SBI) has developed a ‘nowcasting model’ with 41 high-frequency indicators associated with industry activity, service activity, and global economy in collaboration with State Bank Institute of Leadership (SBIL), Kolkata.

The economics research team said that going by the estimate of 1.3% GDP growth, India would still be the fifth-fastest-growing country among 25 nations that have released their GDP numbers so far.

‘Concomitant decline’

It said one likely consequence of any upward revision in FY21 estimates is a concomitant decline in FY22 GDP estimates.

“Our estimates now indicate that there might be nominal GDP loss of up to ₹6 lakh crore during Q1 FY22 as compared to loss of ₹11 lakh crore in Q1 FY21,” it said.

Real GDP loss would be in the range of ₹4-4.5 lakh crore and, hence, real GDP growth would be in the range of 10-15% (as against RBI forecast of 26.2%), the researchers said.

The researchers further said both deposits and credit of all the banks declined in April and May. However, the trend in deposits had changed from FY21.

Deposits had increased by a staggering ₹2.8 lakh crore in 2020-21; and in the current financial year, it has already increased by ₹1 lakh crore till May 7.

Household stress

“The interesting point to note is that deposits have shown alternate periods of expansion and contraction in FY22 in the first three fortnights,” it said.

According to the SBI research team, it is possible that such expansion, followed by contraction, could indicate household stress as people getting salary credits in the first fortnight are withdrawing it in the second fortnight for health expenses. They are also stocking up currency on a precautionary motive and given an uncertain scenario, and the trend continues.


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Printable version | May 16, 2022 11:38:33 am | https://www.thehindu.com/business/Industry/gdp-likely-grew-by-13-in-q4-fy21-sbi-research/article34644413.ece