GDP growth estimated to be 8.1% in Q2 FY22: SBI Ecowrap

The latest State Bank of India Ecowrap report released on Monday estimates the GDP growth to be around 8.1 per cent with an upward bias for Q2 FY22. The lender states that it now expects FY22 GDP growth rate to be in the range of 9.3-9.6 per cent. SBI states that the report uses the dynamic factor model to estimate the common, representative or the latent factor of all the 41 high-frequency indicators from Q4 of FY13 to Q2 of FY22.

The SBI Ecowrap states that the upward revision is due to India’s slower -- 11 per cent -- increase in COVID-19 cases during Q3 2021. The increase in cases has declined to 2.3 per cent in November over September, it highlights. Over 81 per cent of the eligible population has received at least a single dose and 42 per cent double dose. In states like Himachal Pradesh, Gujarat, Uttarakhand, Kerala, Karnataka, Telangana and Madhya Pradesh more than 50 per cent have received both the doses.

“India’s projected 8.1 per cent growth rate in Q2 (FY22) is the highest growth across all economies. The average GDP growth of 28 selected economies has decelerated to 4.5 per cent in Q3 (2021) as against 12.1 per cent. Also at an annual rate of 9.3-9.6 per cent, India’s real GDP growth would now be 1.5-1.7 per cent higher than the pre-pandemic level of FY20,” states the report.

The report also mentions Prime Minister Narendra Modi’s decision to repeal the three farm laws on November 19. The Ecowrap suggests key agricultural reforms that could act as enablers even without the bills.

The SBI Ecowrap states that instead of minimum support price (MSP) as a price guarantee -- that the farmers are demanding -- the government should insert a quantity guarantee clause for a minimum period of 5 years stating that procurement to production percentage of crops being currently procured should at least be equal to last year percentage with safeguards in exceptional events like droughts, floods etc).

“Second, explore converting the Minimum Support Price to Floor Price of Auction on National Agriculture Market (eNAM). Third, efforts must also continue to strengthen APMC market infrastructure...Fourth, establish a Contract Farming Institution in India that will have the exclusive right to oversee price discovery in Contract Farming...Fifth, ensure a symmetric procurement across states,” the report suggests.

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