The report has been authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.
The report has been authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.

It is estimated that the GDP decline for FY21 will be around (-) 7 per cent, which is a revision from the early estimates of (-) 7.4 per cent. Apart from Q3 FY21, the Q4 growth will also be in positive territory (approximately 2.5 per cent), the State Bank of India (SBI) report said.

The report, authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India, stated, “Based on ‘SBI Nowcasting Model’, the forecasted GDP growth for Q3 would be around 0.3 per cent (with upward bias). Additionally, out of the 41 high frequency leading indicators, 51 per cent are showing acceleration. We now expect GDP decline for the full year to be around 7.0 per cent (compared to our earlier prediction of –7.4 per cent).

The report further stated that it will retain GDP forecast for FY22 at 11 per cent, but with the caveat that 11 per cent will be the floor below which it cannot fall. “The corporate results so far also reinstate the fact that Q3 growth would be much better than the Q2 growth. The corporate GVA of 1,129 companies has expanded by 14.7 per cent in Q3 as compared to 8.6 per cent growth in Q2 (of 3,758 companies excluding telecom),” it stated.

The report added that the 9.5 per cent of fiscal deficit of Centre might be on the higher side. “We already estimate that excluding off balance sheet liabilities, the fiscal deficit of the Centre is at 8.7 per cent of GDP.”

Gross tax revenue as per revised estimate is expected at Rs 19 lakh crore or 9.8% of GDP. However, gross tax revenue up to 20 December is already Rs 13.38 lakh crore. This means the government projects Rs 5.62 lakh crore to be collected in the last quarter. However, the amount collected in the third quarter (Rs 6.17 lakh crore) is 36.8 per cent higher than the gross tax collected in Q2 (Rs 4.5 lakh crore).

“Gross tax collection estimate based on revised FY21 numbers and collections till FY21 December end shows that in Q4 tax collections will show a negative qoq growth of -8.9 per cent. This seems unrealistic and thus we believe that this year ultimate gross tax collections would possibly be on the other side," stated the report.

Furthermore, next year, nominal GDP growth is expected in double digits. This is mainly expected due to higher gross tax collections next year, which may be higher than the budgeted Rs 22.17 lakh crore, or 9.9 per cent of GDP.

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