India's GDP growth may fall to 1.1 per cent in FY21 owing to coronavirus crisis, a research report said. The nominal GDP for FY21 could be around 4.2 per cent as there is a possibility of subsidies outstripping tax collection, the SBI Ecowrap report also said. Similarly, the rate of growth in FY20 is expected to fall to 4.1 per cent from 5 per cent estimated by several agencies before the coronavirus outbreak, the SBI report said. "We are building in a downward revision in FY20 GDP growth from 5 per cent to 4.1 per cent that results in gain of 1.1 per cent for FY21, which is exactly our estimate for FY21. Thus, if FY20 GDP is not revised down to 4.1 per cent then growth for FY21 could be even lower than 1.1 per cent. Q4FY20 GDP could now be at 1.1 per cent, Q1FY21 GDP could witness a contraction of 6 per cent, or even higher and Q2FY20 could witness no growth," the report said.
The lockdown extension could also lead to an economic loss of Rs 12.1 lakh crore or 6 per cent of the nominal gross value added (GVA), the SBI report added. The coronavirus lockdown, which was recently extended till May 3 by the government, is expected to have a significant impact on various macroeconomic parameters, the report said.
Quoting PLFS survey FY18, the report said that there are 37.3 crore workers engaged as self-employed, regular and casual workers, with the share of self-employed 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 causal labourers, this income loss is 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," the report also said.
The net tax revenue may see a shortfall of nearly Rs 4.12 lakh crores, and revenue shortfall for states may stand at Rs 1.32 lakh crores. The revised fiscal deficit would be at 5.7 per cent of GDP, it added.