State Bank of India has revised downwards its growth projection for 2021-22 to 10.4% real GDP growth and 14.3% nominal GDP growth, from 11% and 15%, respectively, citing the second wave of COVID-19 and the spate of ongoing partial, local, and weekend lockdowns in almost all States.
The country’s largest bank expects the second wave to peak in the third week of May, and pointed out that in the first wave, Uttar Pradesh and Maharashtra had peaked before the national peak during the first wave.
“Now new cases in Maharashtra seem to be stabilising but share of cases in total of various other States such as Chhattisgarh, Madhya Pradesh, Gujarat has increased and these are showing increase in daily new cases. So if other States also implement strict actions to control their spread, the national peak may come within two weeks after the Maharashtra peak,” the bank’s research team has estimated.
This month’s lockdowns had already cost this year’s GDP by 0.7%, SBI reckoned, with total losses estimated at ₹1.5 lakh crore as economic activity hit a five month low as per the bank’s estimates. Maharashtra, Madhya Pradesh and Rajasthan account for 80% of these losses, while the worst-affected western State alone accounts for 54% of this economic cost of the pandemic.
Calling for a sharp ramp up in vaccinations in order to thwart any further COVID-19 waves in the country, SBI’s economic research team said in a report on Friday that Maharashtra has suffered an estimated Rs 82,000 crore loss already which will ‘definitely increase if restrictions are further tightened.
“Being the economically biggest and most industrialised State in India, this lockdown will have huge impact on growth,” the report said, adding that reverse migration of labour is continuing unabated.
“According to data provided by Western Railways for the first 12 days of April, almost 4.32 lakh people returned to UP, West Bengal, Bihar, Assam and Odisha from Maharashtra. Of these, 3.23 lakh went to UP and Bihar alone,” SBI’s group chief economic advisor Soumya Kanti Ghosh said in the report.
Another 4.7 lakh workers are estimated to have left for northern and eastern States on the Central Railway, taking total migration out of Maharashtra in just the first 12 days of April to over 9 lakh.
Economic activity has taken a severe hit in April, after showing an improvement in March 2021, SBI Research said. “SBI business activity index shows a decline in activity with a latest reading of 86.3 for the week ending April 19. This is the lowest in five months.”
“All the indicators have shown a dip with the maximum decline in Apple mobility index, weekly food arrival at Mandis and RTO revenue collections,” the report pointed out.