New Delhi: The State Bank of India in its latest research report raised India’s growth projection to (-)7.4 per cent for FY21 from previously expected (-) 10.9 per cent. The report said the revised GDP estimates are based on SBI ‘Nowcasting Model’ with 41 high frequency indicators associated with industry activity, service activity, and global economy.
The report also believes that it would take seven quarters from the fourth quarter of FY21 for GDP to reach the pre-pandemic level in nominal terms.
“We now expect GDP decline for the full year (FY21) to be in single digits at 7.4 per cent (compared to our earlier prediction of ( ) 10.9 per cent), aligned with RBI and markets’ revised forecasts post Q2,” SBI’s Ecowrap report said.
Based on this model, the forecasted GDP growth for third quarter would be around 0.1 per cent (with downward bias), it said.
Out of the 41 high frequency leading indicators, 58 per cent are showing an acceleration in the third quarter.
Apart from Q3 FY21, the Q4 growth will also be in positive territory (at 1.7 per cent). However, all projections are conditional on the absence of another wave of infections, the report said.
The research report forecast FY22 GDP growth to be at 11 per cent, primarily due to the base effect.
The report said it will take almost seven-quarters from Q4 FY21 to reach the pre-pandemic level in nominal terms and there will be a permanent output loss of around 9 per cent of GDP.
