India's Economic Growth May Fall To 1.1 Per Cent In FY21: SBI Report

India's GDP growth may slip to 1.1 per cent in the current financial year on the back of the economic impact of COVID-19, a research report by State Bank of India said on Thursday.

The economic growth rate during 2019-20 is estimated to fall to 4.1 per cent from the earlier 5 per cent estimated by several agencies before the outbreak of pandemic which has now engulfed the world.

According to the SBI Ecowrap report, the extension of the lockdown till May 3 can possibly lead to an economic loss of about Rs 21.1 lakh crore or 6 per cent of the nominal Gross Value Added (GVA).

"Nominal GDP for FY21 could be lower/closer to 4.2 per cent, as there is a strong possibility of subsidies outstripping tax collections. However, the real GDP growth for FY21 would be around 1.1 per cent," the report read.

The report said that the lockdown is expected to have a significant impact on several macroeconomic factors. Quoting PLFS survey of 2017-18, the report highlighted that there are 37.3 crore workers engaged as self-employed, casual workers.

"We estimate the income loss per day of these 37.3 crore workers due to lockdown is around Rs 10,000 crore, which translates into a loss of Rs 4.05 lakh crore for the entire lockdown period. For causal labourers, this income loss it at least Rs 1 lakh crore. Thus any fiscal package should at least strive to more than make up for this Rs 4 lakh crore income loss," it added.

The fiscal deficit of the states is expected to increase to 3.5 per cent of GDP from the budgeted 2 per cent in FY21, as per the report.

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