SBI Research: Q1 GDP Reveals Deeper Malaise; Estimate Real GDP At -10.9% In FY21 

SBI Research Report

India’s Gross Domestic Product growth pluged to 23.9% in Q1 FY21 due to the nation-wide lockdown imposed on March 25, 2020 in the wake of Covid-19 pandemic and is much worse than market and our estimates.

This is India's worst growth performance since the country stated reporting quraterly GDP data in 1996.

In the 2004-05 base, India’s lowest quarterly GDP growth was 1.66% in Q3 FY03. Till now GDP growth data of 60 countries has been released.Apart from China and Vietnam all economies exhibited decline in growth.

The average decline of economies in April-June 2020 is 12.2% as compared to 1 4.% decline in January-March 2020.

The only saving grace in these times is the growth of 3.4% in agriculture and allied activities, though the growth in nominal Agri GDP was at 5.7%, as against an average 13 5.% in previous two quarters.

This was expected as from the beginning itself Government has imposed least restrictions on this sector.

Also till June 2020 the spead of Covid-19 was primarily in urban areas and rural areas were almost unscatched from the pandemic.

However, Q2 could see a reversal of sorts with rural areas now in grip of Covid-19.

Industry is the worst affected sector with decline of 38 1.% in Q1 FY21 as compared to 4.2% growth in Q1 FY20.

Services sector exhibited a decline of 20.6% in Q1 FY21 in comparision to 5.5% growth in Q1 FY20.

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