The SBI Ecowrap in its latest report has said it remains to be seen if the slowdown in the Indian economy has "bottomed out". India's GDP growth was recorded at 4.5 per cent for Q2 of FY20, way below 7 per cent during the same period previous fiscal. The last time India witnessed a GDP growth of less than 5 per cent was in the fourth quarter of FY13 when it grew at 4.3 per cent. The economy grew at 5 per cent in April-June quarter.
Stating the GDP growth has slowed down to 4.8 per cent in H1FY20, the report said the full-year growth would be around 5 per cent, with a marginal recovery in Q3 and Q4. "Going forward, the incremental move up in Q3 will be minimal, while Q4 as of now will largely be a base effect!" the report said.
Highlighting alarming facts, the report said during the second quarter of FY20, the nominal GDP grew by merely 6.1 per cent, lowest since 1968-69. It said agriculture and allied activities grew by 2.1 per cent in Q2, compared to 4.9 per cent last year. The growth in the industry segment also fell to 1 per cent in Q2 (2.7 per cent in Q1 FY20) as against the growth of 6.7 per cent in Q2 FY19. The services GDP also declined to a 22-quarter low of 6.2 per cent, compared to 7.3 per cent in Q2FY19.
The report says the sectoral data for October, which accounts about 85 per cent of the total bank credit deployed by 39 scheduled commercial banks, shows that credit to industry and services has declined incrementally by Rs 1.62-lakh crore, but credit to agri and allied and personal loans increased by Rs 1.92 lakh crore.
The SBI Ecowrap report also said the RBI might announce more rate cuts of up to 25 basis points in the forthcoming policy meeting on December 5.
It said the government's overall tax revenue shortfall for the year could go up to Rs 2.03 lakh crore. "The government has estimated that the total revenue foregone for the reduction in corporate tax rate and other relief estimated at Rs 1.45 lakh crore. However, only 58 per cent (Rs 84,100 crore) of the Rs 1.45 lakh crore fiscal bonanza will be revenue loss for the Centre," it said, adding that there would be no shortfall under income tax collection. The tax shortfall due to low GST collections is expected to be around Rs 83,000 crore.
Edited by Manoj Sharma
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today