Mumbai:
According to an SBI research report - Ecowrap - the country's gross domestic product (GDP) is expected to expand at 5.8% in the third quarter of fiscal 2022.
In the second quarter of 2021-22, the country's GDP grew by 8.4%, surpassing pre-pandemic levels. However, GDP growth in the July-September period was lower than the preceding quarter's 20.1 percent gain.
On February 28, the National Statistical Office (NSO) will release GDP estimates for Q3 FY 2021- 22.
"As per SBI Nowcasting Model, the forecasted GDP growth for Q3 FY22 would be 5.8 per cent, with a downward bias. The full year (FY22) GDP growth is now revised downwards to 8.8 per cent from our earlier estimate of 9.3 per cent," the report said on Friday.
The Nowcasting Model is based on 41 high-frequency data related to industry, service, and global economic activity.
The real GDP will be 2.35 lakh crore higher / 1.6% higher than the FY20 real GDP of 145.69 lakh crore, according to the research.
Private consumption has remained below pre-pandemic levels, according to the report, and the rebound in domestic economic activity has yet to be broad-based.
The high-frequency indicators indicate that demand weakened in Q3 and will continue to do so through January 2022, owing to the impact on contact-intensive services.
Since August 2021, rural demand indicators like as two-wheeler and tractor sales have been declining.
Consumer durables and passenger vehicle sales fell in the third quarter, while domestic air traffic deteriorated as a result of the Omicron variant spread. Investment activity, on the other hand, is picking up, with merchandise exports maintaining strong, according to the report.
According to the research, the weaker growth momentum reinforces recent claims that an incipient recovery needs more accommodating policy support than previously thought.
"We thus expect liquidity normalization may be delayed. This could have a further softening impact on government securities (G-sec) yields from current 6.7 per cent towards around 6.55 per cent or so," the report said.
According to the paper, the government may provide rural impoverished people with livelihood loans of up to $50,000.
This loan might be provided on the assumption that interest-only payments will keep the loan current, with further loan renewal contingent on good repayment history, according to the report.
"If the government were to bear, say, 3 per cent interest subsidy, on a portfolio of ₹ 50,000 crore, the outlay would be only ₹ 1,500 crore during 2022-23. And these loans will also act as a big consumption booster at subsistent levels," it said.
According to the research, another benefit of these micro livelihood loans is that they will assist the banking sector in building a thorough database and credit history of marginal borrowers, which may then be used to develop new credit-worthy borrowing classes.
The existing overdraft facility for PMJDY accounts in the banking system, which has been in place for some time, can be streamlined and tech-enhanced with a central nodal agency/bank to properly monitor and promote the scheme, according to the report.
According to the research, given the third wave's tremendous success in rural regions, livelihood loans could be the silver bullet that catapults the broader economy to unprecedented heights.