Economy difficult to recover, growth will be down -10.9 percent in 2020-21

 

It is difficult to recover the Indian economy from the tremors of the Corona epidemic and lockdown. SBI said in its a report released on Tuesday that the record decline in the first quarter growth rate will continue even further and the actual growth rate of GDP is expected to be down by -10.9 per cent in 2020-21.

 

The government released the GDP data on Monday, stating that the growth rate in the first quarter (April-June) was down -23.9 per cent. Earlier, the ECORAP report projected a growth rate of -6.8 per cent for the current financial year. SBI Research said, our initial estimate is that GDP growth will be negative in all quarters. The growth rate is expected to be down by -12 to -15 per cent in the second quarter as well, while it is expected to be -5 to -10 per cent in the third quarter and -2 to -5 per cent in the fourth quarter. In this way, the real GDP growth rate for the entire financial year can be -10.9 per cent.

 

SBI Research said, the biggest reason for the record decline in the first quarter is the decrease in private consumption. Due to this, the demand for investment also could not increase. Private consumption and expenditure account for 57 per cent of GDP, but due to the current crisis, it is expected to fall by 14 per cent in 2020-21. Prior to this, private consumption and spending have been growing at an average rate of 12 per cent in nine financial years from 2010-11 to 2019-20. This clearly indicates that there will be a 26 per cent reduction in private consumption and expenditure this year. However, RBI's debt growth figures indicate little relief. Accordingly, debt growth in all major sectors except industry increased in July. Demand for small-scale industries, agriculture and personal loans has also increased. The report suggests major improvements in the construction, trade, hotel and aviation industries.