With the extension of the lockdown until May 3, it is estimated that in the month of April there will be a loss of Rs 9.8 lakh crore in nominal GVA, according to SBI Ecowrap. Meanwhile, the overall loss for FY21 would be around Rs 12.1 lakh crore. The report also revised GDP estimates for FY21 from 2.6 per cent to 1.1 per cent.
In the report, SBI Ecowrap stated, “Overall we believe that only 40 per cent economic activity is happening in April month and due to this, nominal GVA growth for Q1 FY21 would be around (-)14.1 per cent.” The inoperability loss due to COVID-19 lockdown would be around Rs 9.8 lakh crore. “The lockdown is going to have a significant impact on our macro parameters,” the report added.
SBI Ecowrap estimates that if lockdown takes nominal GDP growth at 4.2 per cent, the real GDP growth for FY21 would be around 1.1 per cent.
The report pointed out that economic activity in mining and construction are completely lost. However, in the manufacturing sector about 25 per cent economic activity has taken place. This is mainly driven by production of medical equipment, sanitisation, dairy, etc. Sectors like communication/broadcasting, banking, insurance, other utility services are operational, even though there is a lockdown.
It was stated that in the fourth quarter of FY 20, GDP could now be at 1.1 per cent and in the first quarter of FY 21, GDP will witness de-growth of 6 per cent or even higher and in the second quarter of FY 21, it could witness no growth.
The report has taken into account the PLFS report for the year 2017-18. It is estimated that around 37.3 crore workers are engaged as self-employed, regular and casual workers. The share of self employed is at 52 per cent, casual workers at 25 per cent and the rest engaged as regular wage earners and others. “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 casual labourers, this income loss will be at least Rs 1 lakh crore.” The report suggested that there is a need to come up with a fiscal package to make up for this Rs 4 lakh crore income loss.
India’s nominal merchandise exports are expected to decline by up to 16 per cent in financial year 2021. “This translates into an output loss of USD 50 billion (Rs 1.86 lakh crore), " the report pointed out.