According to a report by State Bank of India, Indian GDP is going to contract by 16.5 percent in the first quarter of new financial year 2021, less than its earlier prediction of a contraction of 20 percent. The figure in the report called Ecowrap was arrived at by considering the results of the first quarter of around 1000 listed companies. The results show over 2 percent decline in the topline and in excess of 55 percent downfall in bottomline.
However, interestingly, the decline in corporate GVA (Gross Value Added) is only 14.1 percent. “In principle, the revenue decline of listed companies has been far outstripped by cost rationalization, thereby not impacting margins,” said the report.
It added that during the months of July and August, coronavirus has made inroads into the rural areas with the percentage of cases in rural districts to the total new cases jumping to 54 percent in August.
Also, the number of rural districts with less than 10 cases has reduced significantly. Andhra Pradesh and Maharashtra have been impacted more severely with increasing coronavirus penetration in rural areas. "These districts contribute mostly around 2-4 percent of GSDP (gross state domestic product) of their respective states, indicating that cases are penetrating deep rural hinterlands," the report noted. The report estimates total (GSDP) loss due to COVID-19 to be at 16.8 percent of GSDP.
State-wise analysis indicates that top 10 states accounted for 73.8 percent of total GDP loss, with Maharashtra contributing 14.2 percent of total loss followed by Tamil Nadu (9.2 percent) and Uttar Pradesh (8.2 percent), it said. Subsequently, the per capita loss for all India is around Rs 27,000 with states like Tamil Nadu, Gujarat, Telangana, Delhi, Haryana, Goa, exhibiting loss of more than Rs 40,000 per person in FY21, the report stated.
The SBI report underlines the fact that a negative GDP and a surge in inflation are bringing the real consumption down, causing the hopes of recovery to weaken. “We really hope for some good news with both preventative and curative drugs currently being worked out for the virus!" says the report from SBI.
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