SBI cuts growth forecast to 10.4% on rising lockdowns

SBI cuts growth forecast to 10.4% on rising lockdowns

NEW DELHI: State Bank of India Research cut India’s growth forecast to 10.4 per cent for FY22 from 11 per cent projected earlier on account of rising Covid-19 infections and increasing restrictions across the country.

India Ratings said the second wave of the pandemic and the slow pace of vaccinations would shave off 30 basis points from India’s GDP expansion in FY22 and revised its growth projection to 10.1 per cent for the current financial year from 10.4 per cent forecast earlier.

The revision assumes the second wave of Covid-19 will start subsiding mid-May onwards, India Ratings said in a note released on Friday.

The second wave of Covid-19 infections will be less disruptive than the first wave, despite the caseload per day reaching more than three times the peak level attained during the first wave,” it said.

While various leading economic indicators showed improvement in March, the SBI business activity index dropped to a five-month low of 86.3 in the week ended April 19.

SBI Research said in a report on Friday that ramping up vaccination efforts rather than imposing lockdowns would be the preferred way to thwart the resurgence of cases in India.

The third wave peak in the US and Japan turned out to be worse than the second wave, SBI Research said, adding, “We as a country cannot afford any third wave.”

“India must vaccinate its population with the single-minded focus to achieve herd immunity and avoid any further waves,” Soumya Kanti Ghosh, group chief economic advisor at SBI, said in the report.

It pegged the cost of vaccinating half the population of 13 major states at about 0.1 per cent of GDP. This, it said, was significantly lower than the 0.7 per cent of GDP, or 1.5 lakh crore, of the economic loss estimated due to existing restrictions.