Second wave of Covid-19 projects a grim outlook for GDP

Skeletons have started coming out of the closets. After having taken the shape of Tsunami, Covid-19 in its second avatar, has been brandishing its double-edged sword. First, it has been taking the toll of innocent human beings. Secondly, it is also posing a challenge before the country's economic growth. What with more and more news of downgrade of GDP forecast. The trend kicked off with the forecast of CARE which was followed by SBI.

Not to mention, the second downward revision of GDP growth forecast by CARE in a month's time was an outcome of surge in Covid cases and subsequent curfews and lockdowns in States.

CARE Ratings has cut GDP growth forecast for FY22 to 10.2 per cent from 10.7-10.9 per cent. Prior to it, it was on April 5, when the credit rating agency had lowered the forecast to 10.7-10.9 per cent from11.0-11.2 per cent. CARE's forecast was followed by Ecowrap, the research wing of the country's largest lender, SBI, which has revised the real GDP for the current fiscal at 10.4 per cent.

The harsh truth remains that whenever the economy goes through stress, corporates are the first who become victim and which is further replicated in the rating downgrades and defaults they pass through.

Having said this, there are some silverlining in the cloud too. Early trend of around 45 listed entities suggests 10 pr cent growth in top line for listed entities while EBIDTA and PAT too grew by16 per cent and 26 per cent in Q4FY21 as compared to Q4FY20.

Entities with less than Rs 100 crore reported 6 per cent growth in net sales and negative PAT despite cut in employee expenses by 10 per cent. But, it is just the beginning and a lot more was needed to be don, from both quarters, The government and the people in common. The need of the hour was to give a Clarion Call to impose self-discipline and follow all those norms on one's own.

While the government was busy making an all-out effort to ensure that there was no dearth of Oxygen supply at the hospitals, it becomes the duty of India Inc also to come forward and actively participate in the nation saving, as has already being done by few of the Corporate houses.

Again, the government has done a praiseworthy step by extending the deadlines for filing of TDS and GST. However, the government should also have done something to stop Kumbh mela gathering and the public gatherings at soon-to-be completed West Bengal Assembly polls which have posed threat before all the measures being taken by the government.

Coming on the vaccine front, the cost of vaccine to inoculate is almost 15-20 per cent of states' health expenditure budget, still it will be only 0.1 per cent of GDP. This is significantly lower than the economic loss in GDP due to lockdown which is already at 0.7 per cent of GDP.