Lockdown in March cost economy 1.4 lakh crore

Mumbai: The country's GDP is estimated to have grown at 1.2 per cent in the last quarter of the previous fiscal as economic activity came to a standstill in the last week of March due to the nationwide lockdown to contain spread of Covid-19, a report said. According to the SBI's research report – Ecowrap - the gross domestic product (GDP) growth is likely to be 4.2 per cent for FY20 and (-) 6.8 per cent for FY21.

The fourth quarter GDP growth number for FY20 will be announced by the National Statistical Office (NSO) on May 29. In the third quarter of FY20, GDP growth slipped to a nearly seven-year low of 4.7 per cent. In Q1 and Q2 of FY20, GDP growth was 5.1 per cent and 5.6 per cent, respectively. "We believe that Q4 (FY20) GDP growth would be around 1.2 per cent as the economic activity in the last seven days of March month was completely suspended due to the nationwide lockdown," the research report said.

The report sees a loss of at least Rs 1.4 lakh crore during those seven days of lockdown. "Subsequently, the annual FY20 GDP growth would be around 4.2 per cent as compared to 5 per cent as it was projected earlier," the report said. It estimates FY21 GDP growth to be around 6.8 percent and gross value added (GVA) growth would be nearly 3.1 percent.

The loss is maximum (around 50 per cent) in red zones and where almost all the big districts of the country are located. The combined loss of orange and red zones is around 90 percent of total loss. State-wise analysis indicates that top 10 states accounted for 75 per cent of total GDP loss with Maharashtra contributing 15.6 per cent of total loss followed by Tamil Nadu (9.4 per cent) and Gujarat (8.6 per cent). These three states also have the largest number of confirmed Covid-19 cases in the country.

The report further said Covid-19 cases in the country could peak anytime in the last week of June., "Based on the current 7-day moving average of new cases witnessed in the country, we believe that new cases are likely to peak somewhere in the last week of June, beginning June 20" the report said. Following that, the new cases are expected to witness steep fall till the beginning of August after which it is expected to gradually reduce to flatten by mid-September. The report, however, said the estimates are purely based on an assessment of current trends that can quickly change given the cyclonic disaster in West Bengal and the continued return of migrant labourers. The number of Covid-19 cases in the country stood at 1, 45,380, as per health ministry data.