In a better-than-projected recovery, India’s GDP is expected to shrink 7.4 percent in FY21, SBI said in a research report, upgrading its earlier estimate of a 10.9 percent contraction. The Bank research team also assumed that it would take seven quarters of GDP from the fourth quarter of FY21 to hit the nominal pre-pandemic stage.
It claimed that the revised GDP estimates were based on the ‘Nowcasting Model’ of SBI with 41 high-frequency indicators related to industrial activity, service activity, and the world economy. GDP growth for the third quarter was expected to be around 0.1 percent based on this model (with downward bias)
In the third quarter, 58 percent of the 41 high-frequency indicators suggested acceleration.
In addition to Q3, Q4 growth will also be in positive territory (at 1.7 percent ). However the absence of another wave of infections was conditional on all predictions, SBI said in its report.
FY22 GDP growth, primarily due to the base effect, was forecast at 11 percent.