According to a State Bank of India estimate, the country will lose Rs 1,50,000 crore as a result of the strict curfews and lockdowns imposed by several states (SBI). According to the research study, Maharashtra, Madhya Pradesh, and Rajasthan account for 80% of the total loss of Rs 1.5 lakh crore. Maharashtra, which has imposed a stricter lockdown than other states, accounts for 54% of the deficit. “Being India’s largest and most industrialized state, this lockdown will have a significant impact on growth,” SBI said.
“At the moment, we estimate a loss of about Rs 82,000 crore for Maharashtra, which will undoubtedly increase if restrictions are tightened further. “It may be relevant to ask how many lockdowns would slow the pace of infections, but for beefing up health infrastructure,” the report said. SBI also reduced its GDP projections for fiscal 2021-22. The updated FY22 actual GDP forecast is now 10.4 % (from 11% previously) and 14.3 % for nominal GDP (earlier 15%).
According to the SBI survey, labor migration is unabated. According to Western Railways data (for April 1-12), nearly 4.32 lakh people have returned from Maharashtra to states such as Uttar Pradesh, West Bengal, Bihar, Assam, and Odisha. Around 3.23 lakh of the 4.32 lakh people, reverse migrated to UP and Bihar alone. “Our estimation from Central Railways indicates that approximately 4.7 lakh reverse migrated from Maharashtra to northern and eastern states,” according to the survey.
It went on to say that the SBI business activity index fell in April, with the most recent reading for the week ending April 19 being %. This is the lowest reading in five months (November 16, 2020, when the value declined to %). All indicators have declined, with the greatest drop in apple mobility, weekly food arrival at mandis, and RTO revenue collection.
Meanwhile, bank credit growth slowed to a 59-year low of 5.6 % in FY21, down from 6.1% in 2019-20. On the other hand, Deposits rose by 11.4 % in FY21, compared to 7.9 % growth in FY20. “In FY21 April-May, a massive monthly incremental increase in deposits (particularly time deposits) was observed as people had fewer options to spend due to the nationwide lockdown. This time, we expect strong demand for time deposits because most states have placed partial lockdowns,” the SBI said.
Meanwhile, early trends from 45 listed entities indicated a 10% increase in top-line for listed entities, while EBITDA and PAT (profit after tax) increased by 16% and 26%, respectively, in Q4 of FY21 compared to Q4 of FY20. Entities with less than Rs 100 crore in revenue posted a 6% increase in net sales, but a negative PAT, despite a 10% reduction in employee expenses. In the commercial paper industry, yields remain below 4%, falling to 3.71 % in April from 4.35 % in March.
