The State Bank of India (SBI) research on Wednesday revised its forecast for contraction in India's GDP in the financial year 2020-21 to 7 percent from 7.4 percent earlier and projected GDP to grow by 0.3 percent in the October-December quarter.
In April-September, the economy contracted 15.7 percent but the second half may see a surprise 2.8 percent growth if the SBI analysis turns out to be correct. Soumya Kanti Ghosh, group chief economic adviser at State Bank of India (SBI) said of the 41 high frequency leading indicators, 51 percent are showing acceleration which should help the economy turn around to the green from the third quarter with a 0.3 percentage point growth which is likely to surprise positively when the final numbers are out.
In April-June, the Indian economy contracted by a record 23.9 percent, but dramatically improved to -7.5 percent in the second quarter. In 2019- 20, the economy had grown 4 percent and in the current fiscal year, it is on course to slip by 7 percent. The consensus is -7.5-8 percent with the NSO pegging it at -7 percent and RBI at -7.5 percent. "We now expect GDP decline for the full year to be around -7 percent compared to our earlier prediction of - 7.4 percent.
Also, Q4 growth will also be in positive territory at around 2.5 percent," Ghosh said, adding promptly that the projections are conditional to the absence of any rise in infections. "We retain our GDP forecast for FY22 at 11 percent (RBI has pegged it at 10.5 percent and the economy survey at 11.5 percent and the budget did not offer a GDP estimate), but with the caveat that 11 percent will be the floor below which it cannot fall," he said.
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