Growth may dip to 2.6% in FY21: SBI

New Delhi, March 26: The country's economic growth is likely to fall sharply to 2.6 per cent in

2020-21 due to the lockdown, a report by SBI Research said on Thursday.

It said GDP growth for

2019-20 could also see a downward revision from 5 per cent to 4.5 per cent, with growth in the fourth quarter of the current fiscal at 2.5 per cent.

Rating agency Crisil has slashed India's GDP growth rate by 170 bps to

3.5 per cent for fiscal 2021, while former chief statistician Pronab Sen said growth in the next two quarters will not be more than 3 per cent due to the lockdown across the country. He said the 21-day lockdown could cause a reduction of about Rs 5 lakh crore in gross domestic product (GDP).

SBI Research said the total cost of lockdown is at least Rs 8.03 lakh crore in nominal terms, an income loss of Rs 1.77 lakh crore and a loss in capital income of Rs 1.69 lakh crore. It said the income loss will be the highest in agriculture, transport, hotels, trade and education.

Crisil said the pandemic and the consequent lockdown for 21 days pose a material risk to India's economic outlook. The adverse effects can dwarf the gains from the sharp drop in crude oil prices, and the anticipated monetary and fiscal stimuli.

"The slump in growth will be concentrated in the first half of next fiscal, while the second half should see a mild recovery," said Dharmakirti Joshi, chief economist,

Crisil.

In an interview, Pronab Sen said, "I don't expect economic growth in next two quarter (of 2020-21) to be more than 3 per cent, which makes achieving the $5-trillion target by 2024-25 very, very difficult." He said at the moment, fiscal stimulus is not going to help growth because it is now a supplyside problem. "Production is not taking place. Fiscal stimulus works when problem is on the demand side."