India's GDP growth expected to be 8.5-9.0% in FY22: SBI Ecowrap

State Bank of India's (SBI) economic research department has estimated the country's GDP (Gross Domestic Product) growth to be 8.5-9% in the current financial year. 

SBI's forecast in its research report is, however, less than RBI's projection of 9.5%. The state-owned lender added that with 20.1% GDP growth clocked in Q1 of FY22 "it (FY22 GDP growth estimate) has now come down to 9.3%."

"Though it is too early to anticipate the FY22 GDP growth estimate, we still believe that this will be in single-digits in FY22 and in the range of 8.5-9.0%. The best thing, however, is that for 2 days in August, vaccination has topped 1 crore including 31 Aug," SBI stated in its latest Ecowrap report.

Also Read: India records Q1 FY22 GDP growth at 20.1% on low base, improved manufacturing

The public lender had revised India's FY22 growth outlook downwards from 10.4% to 7.9% in June.

"Overall, the story is in Q1 FY21, the country exhibited real GDP loss of Rs 8.7 lakh crore (on YoY basis) due to nationwide lockdown. In Q1 FY22, the gain was around Rs 5.4 lakh crore. This indicates that loss of Rs 3.3 lakh crore still needs to be recouped to reach the pre-pandemic level," the report added.

Regarding the 20.1% GDP growth reported in Q1 of FY22, SBI's projection stood at 18.5%. The bank, in its report, further noted that the real GVA (Gross Value Added) increased by 18.9%.

Agriculture growth in Q1FY22

The report stated that agriculture and allied sectors grew by 4.5% in Q1 FY22 as against 3.5% in Q1 FY21 and 3.1% in preceding quarter. "This sector remains unscathed from the pandemic and is growing strong," as per SBI research report Ecowrap.

Industry growth in Q1FY22

The report added that industry was the worst affected sector during the COVID-19 pandemic and rebound sharply in Q1 FY22 (grew by 46.6%) due to 49.6% growth in manufacturing and 68.3% growth in construction. However, much of the growth is due to the huge low base in Q1 FY21, it noted.

Also Read: Ind-Ra revises GDP growth rate to 9.4% for FY22

Services sector growth in Q1FY22

Services sector, the report stated, has exhibited a YoY (year-on-year)  growth of 11.4%, however, on QoQ (quarter-on-quarter) basis the sector has contracted by 11.8%. "Though, growth has been seen in 'Financing, Insurance, Real Estate & Bus Services' but 'Trade, Hotels, Transportation' and 'Public Administration and Defence' has contracted significantly on QoQ basis," it said.

GDP: Expenditure side

The report noted that, on the expenditure side, due to base effects the YoY growth in Q1 FY22 private final consumption expenditure has been at a record 19.3%.

"If we compare with Q1 FY20, the degrowth is 11.9%. Thus, the recovery has not happened as Indian households faced the brunt of the second wave in Q1," the report noted.

Investment scenario looks optimistic

SBI, in the report, stated that FY22 "looks optimistic with around Rs 5.6 lakh crore investment announcements made so far in last five months (April-Aug), as per Projects Today."

The banks added that around 70% of the said investment announcements, Rs 3.84 lakh crore came from private sector and approx. 30% from the government.