Mumbai, June 1
SBI economists on Tuesday sharply slashed their FY22 GDP growth estimates to 7.9% — the lowest among all analysts — from the earlier projection of 10.4% growth.
The economists at the state-run lender seemed to attribute the impact of the second wave of Covid infections as a key factor for the revision in the growth estimate, and pitched for faster vaccination.
“… our analysis shows a disproportionately larger impact on the economy this time and given that rural is not as resilient as urban, the pick-up in pent-up demand is unlikely to make a large difference in FY22 GDP estimates, and hence it could only be a modest pick-up,” they said.
Second wave of Covid to blame
Earlier, SBI economists had projected a 10.4% growth for the current fiscal. The second wave of Covid infections is a key factor for the revision in the growth estimates
The increasing international commodity prices will also have an impact on the GDP growth, said the economists
The SBI economists said the increasing international commodity prices will also have an impact on the GDP growth, and added that the overall consumption trajectory will depend on the recovery in ‘trade, hotels, transport, communication and services related to broadcasting’ services which supports roughly 25 crore households.
They, however, said at Rs 145.8 lakh crore, the real GDP for FY22 will be “slightly higher” than that in FY20, and called it a ‘W-shaped’ recovery with two troughs and not the earlier anticipated ‘V-shaped’ recovery.
The RBI has maintained its growth estimate at 10.5%, despite the emergence of the second wave and may have a relook at the number at this week’s policy review.
Other analysts have been revising down their estimates after the devastating second wave, with an 8.5% growth being lowest among the predictions.
Official data released on Monday said the economy grew at faster than expected at 1.6% for the fourth quarter of FY21, resulting in a contraction of 7.3% for the entire fiscal. — PTI