India's GDP to contract 6.8% in FY21 due to coronavirus lockdown: SBI report

India's gross domestic product (GDP) is estimated to have grown at 1.2 per cent in the fourth quarter of the last fiscal hit by economic shutdown due to the coronavirus crisis, a report said. The GDP growth is expected to be 4.2 per cent for FY20 and (-) 6.8 per cent for fiscal year 2020-21, SBI's Ecowrap report said. "Q4 (FY20) GDP growth would be around 1.2 per cent as the economic activity in the last seven days of March month was completely suspended due to the nationwide lockdown," it added. The report has pegged a loss of nearly Rs 1.4 lakh crore in the given period. The fourth quarter GDP growth data is scheduled to be announced by the government on May 29.

The report said that India's economy could contract by more than 40 per cent in the April-June quarter of 2020-21 owing to nearly two months of countrywide lockdown. "Q1GDP FY21 loss will be humongous and could even exceed 40%. However, Q2GDP numbers could witness a smart recovery and clock 7.1%, if we are able to sustain the demand. Q3 and Q4 growth numbers could also look much better, with an average of 6%, but the Q2 bump could come down with the immediate bust in pent up demand in Q2 subsiding subsequently," it said.

However, things are expected to change fast as the income and job loss could "again propel us towards a lower equilibrium after the initial bump up". The government is expected to come up with another targeted package later in the year, SBI report noted.

The coronavirus cases could peak anytime in June's last week, the report also said."Based on the current 7-day moving average of new cases witnessed in the country, we believe that new cases are likely to peak somewhere in the last week of June, beginning June 20," the report said.

Meanwhile, Goldman Sachs recently said that India's economy may contract by 45 per cent in the June quarter. It also projected a 5 per cent decline in GDP for 2020-21 and said that the fall will be deeper compared to all "recessions" India has ever experienced.

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