The nation’s economic system expanded by 8.4 per cent within the second quarter of 2021-22, to cross pre-pandemic ranges. Nonetheless, the GDP progress in July-September interval was slower than the 20.1 per cent enlargement within the earlier quarter.
The Nationwide Statistical Workplace (NSO) will declare the GDP estimates for Q3 FY 2021- 22 on February 28.
“As per SBI Nowcasting Mannequin, the forecasted GDP progress for Q3 FY22 could be 5.8 per cent, with a downward bias. The complete 12 months (FY22) GDP progress is now revised downwards to eight.8 per cent from our earlier estimate of 9.3 per cent,” the report stated on Friday.
The Nowcasting Mannequin relies on 41 excessive frequency indicators related to business exercise, service exercise, and international economic system.
The true GDP can be round Rs 2.35 lakh crore extra / 1.6 per cent greater than the FY20 actual GDP of Rs 145.69 lakh crore, the report stated.
The report stated the restoration in home financial exercise is but to be broad-based, as personal consumption remained beneath pre-pandemic ranges.
The excessive frequency indicators recommend some weakening of demand in Q3 additionally persevering with to January 2022, reflecting the drag on contact-intensive companies.
Rural demand indicators, say two-wheeler and tractor gross sales, continued to say no since August 2021.
Amongst the city demand indicators, shopper durables and passenger automobile gross sales contracted in Q3, whereas home air site visitors weakened within the wake of Omicron variant unfold. Funding exercise although, is displaying a traction in choose up, with merchandise exports remaining buoyant, it stated.
The report stated this slower progress momentum reconfirms latest assertion that incipient progress restoration must be supported by accommodative coverage longer than anticipated.
“We thus count on liquidity normalization could also be delayed. This might have an additional softening impression on authorities securities (G-sec) yields from present 6.7 per cent in the direction of round 6.55 per cent or so,” the report stated.
The report recommended that the federal government can provide livelihood loans, say as much as Rs 50,000 to rural poor.
This mortgage could also be given on the premise that interest-servicing alone will preserve the mortgage normal with subsequent mortgage renewal linked to profitable reimbursement file, it stated.
“If the federal government have been to bear, say, 3 per cent curiosity subsidy, on a portfolio of Rs 50,000 crore, the outlay could be solely Rs 1,500 crore throughout 2022-23. And these loans may also act as an enormous consumption booster at subsistent ranges,” it stated.
The extra benefit of those micro livelihood loans is that they may assist the banking system put together a complete database and credit score historical past of marginal debtors that may be additional leveraged to create new credit-worthy borrowing courses, the report stated.
The current overdraft facility for PMJDY accounts within the banking system, in existence for someday could be streamlined and tech enriched with a central nodal company/financial institution to watch and promote the scheme meaningfully, it stated.
The report additional stated that given the numerous success of vaccination within the third wave in rural pockets, the livelihood loans could be the silver bullet catapulting the broader economic system to unprecedented highs.