State Bank of India revises FY21 GDP estimates

State Bank of India’s Economic Research Department revised FY21 GDP estimates to -7.0%. Previously it had estimated GDP at -7.4%. As per the report authored by SBI’s Group Chief Economic Advisor Dr. Soumya Kanti Ghosh, based on ‘SBI Nowcasting Model’ the  GDP growth forecast for Q3 would be around 0.3%. Apart from Q3 FY21, the Q4 growth will also be in positive territory (approximately 2.5%). SBI is expecting FY 22 GDP to be 11%. But it has cautioned that all projections are conditional on the absence of any rise in infections.
The report says the 9.5% fiscal deficit of the Centre might be on the higher side. SBI has already estimated that excluding off-balance sheet liabilities, fiscal deficit of the Centre is at 8.7% of GDP. Furthermore, next year, nominal GDP growth is expected in double digits. This is mainly expected due to higher gross tax collections next year, which may be higher than the budgeted Rs 22.17 lakh crore, or 9.9 per cent of GDP.