SBI Research, in its latest Ecowrap report, says GDP recovery has been better than expected and based on it, the FY21 GDP estimate has been revised to -7.4% from earlier -10.9%. SBI's revised GDP estimates are based on 'Nowcasting Model' with 41 high-frequency indicators associated with industry activity, service activity, and global economy showing recovery.
Based on this model, the GDP growth for Q3 is estimated at 0.1 per cent, with a downward bias. "Additionally, out of the 41 high frequency leading indicators, 58 per cent are showing an acceleration in Q3," says the report.
The report adds that there's been a positive momentum of various economic indicators -- RTO transactions, revenue collection at RTO, revenue earning of freight traffic, weekly food arrival, petrol and diesel consumption continued in November.
"Even our business activity index, which is based on high-frequency indicators, shows improving momentum after a modest decline in the week of Diwali," SBI Research said.
It estimated that due to these effects, the FY22 GDP growth would be at 11% primarily due to base effect, provided there's no other wave of COVID-19 infections. "It will take almost 7-quarters from Q4 FY21 (and 5-quarters from now) to reach the pre-pandemic level in nominal terms and there will be a permanent output loss of around 9% of GDP," says the report.