Double-digit GDP growth a bit ambitious: SBI Report

Wednesday 12th May 2021 06:52 EDT
 

The second wave of Covid has posed a downside risk to economic activity in the first quarter of the current fiscal year, but there are reasons to expect a muted economic impact as compared to the first wave, a finance ministry report said. “Learning to ‘operate with Covid-19’, as borne by international experience, provides a silver lining of economic resilience amidst the second wave,” according to the ministry’s monthly economic report.

It said that growing infections and consequent restrictions have imparted a downside risk to economic activity. The sharp surge in cases and deaths and the lockdowns in several states have hurt economic activity. Most experts now agree that there is likely to be an impact on the country’s growth prospects and the economic recovery that was under way.

The first wave and strict lockdown had hurt the economy severely, leading to a recession with two successive quarters of contraction last year. Since the opening up of economic activity, there has been a sharp recovery and most agencies had estimated the economy to grow in the 10%-12% range and emerge as the fastest growing economy in the world.

However, the second wave, which has heaped misery in recent weeks, has prompted several agencies to shave off their growth estimates marginally. The Reserve Bank of India (RBI) still maintains that the dent is expected to be moderate in comparison to a year ago. In a separate report, the SBI said they are now “little apprehensive” of double-digit growth in FY22. “Given the rise in cases and restriction in every state, real GDP growth of 10.4% looks a bit ambitious,” Soumya Kanti Ghosh, SBI group’s chief economic adviser, said.


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