SBI Research Sees 40% GDP Contraction In June Quarter Of Fy21

In a report, SBI Research said that India is on course to witness the biggest loss in the June quarter with GDP nose-diving by over 40% during the period. Also, the research firm expects another round of stimulus later in the year to revive up the distressed economy.

In the entire fiscal year, SBI Research expects a contraction by 6.8% after witnessing smart recovery in the second quarter ending September 2020 and improved macro numbers in Q3 and Q4.

The firm anticipates second quarter growth at 7.1% if there is recovery in demand.
Also, on similar lines, the rating agency CRISIL for the first quarter ending June sees GDP contracting by 25% with the country experiencing its worst-ever recession. On an overall basis for the entire FY21, GDP is expected to contract by 5%.

Fitch also lowered India's growth forecast and on late Tuesday said, "Biggest forecast cut was to India where we now anticipate a 5% decline in the current financial year in contrast to an earlier forecast of growth of 0.8%".

Also, because of the base effect there could be a bump up in growth in the second quarter of the ongoing financial year. And SBI Research sees Covid 19 infections to peak in June end. And this bump up may rapidly degenerate with job losses and income taking a toll on consumer consumption behavior. "We thus believe the government might be looking at the data more closely to prevent such loss in momentum in Q3 and Q4 and even come up with another targeted package later in the year,"SBI Research said

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