Virendra Pandit
New Delhi: The rigorous steps taken by some states to contain mobility and impose partial lockdowns to contain the spread of the Covid-19’s second wave may dent Indian economic recovery and momentum causing an economic loss of Rs 1.5 trillion (Rs.1.5 lakh crore), according to the State Bank of India Economic Research Department (SBIERD).
Despite a souring second wave, no one has, however, downgraded India’s GDP growth to single-digit, or pushed it in a negative zone, so far.
“Total loss (due to these curbs) is estimated at Rs 1.5 trillion, of which Maharashtra, Madhya Pradesh, and Rajasthan account for 80 percent. Maharashtra alone accounts for 54 percent,” Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser, SBIERD, said on Friday.
In this scenario, it also downgraded India’s Gross Domestic Product (GDP) estimates for fiscal 2021-22 (FY22). The revised projections now stand at 10.4 percent for real GDP (from earlier 11 percent) and 14.3 percent for nominal GDP (earlier 15 percent).
Reverse migration of laborers from manufacturing hubs in Maharashtra to their respective hometowns may cause an economic loss of nearly Rs. 82,000 crores for this western state. The loss may go up if restrictions are tightened further.
“According to the data provided by Western Railways (for the period of April 1-12, 2021), almost 4.32 lakh people have returned to the states like Uttar Pradesh (UP), West Bengal, Bihar, Assam, and Odisha from Maharashtra. Of 4.32 lakh, around 3.23 lakh reverse migrated to UP and Bihar alone. From Central Railways, our estimate indicates that around 4.7 lakh reverse migrated to northern and eastern states from Maharashtra.”
But, analysts expect the negative influence to be short-lived unless the mobility curbs are widened to impact the broader economy. Most of them, including the IMF, S&P, and ace Indian investors like Rakesh Jhunjhunwala has pegged a double-digit growth.