The gross state domestic product (GSDP) of states is likely to contract up to 14.3 per cent in the current financial year, a report has stated.
As per the latest data by the India Ratings and Research (Ind-Ra), contraction in GSDP will be in the range of 1.4% – 14.3%. The states that are likely to witness a double-digit contraction in GSDP growth in FY21 are Assam, Goa, Gujarat and Sikkim.
“We expect the gross state domestic product (GSDP) of all states in India to contract in FY21. The contraction will be in the range of 1.4 per cent-14.3 per cent,” the report said.
Despite the nation-wide lockdown enforced on 25 March 2020, several economic activities defined as essentials remained operational, while the lockdown impacted different sectors, agriculture, industry and services, differently.
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“Since agricultural activities were less impacted, the states having a higher share of agriculture are expected to have suffered less compared to the one where the share of agriculture is low. Also, some sub-sectors especially in the services such as banking and financial services, IT and IT enabled services were less impacted, because they were able to readjust their operations remotely owing to the high penetration of digital platform in their business operations,” the report said.
The states in which the share of these services is high are expected to have suffered less during the lockdown compared to the one where share of these services is low, it added.
For example, the proportion of agriculture in gross value added was 14.6% for Haryana and 25.0% for Punjab in FY19. Similarly, the proportion of industry and services was 31.1% and 54.3% respectively in Haryana and 25.2% and 49.8% in Punjab. This means the overall growth performance of Haryana is more susceptible to the performance of the industrial and services sectors.
Data suggests that the proportion of Haryana economy that became dysfunctional during the lockdown is 64.3% — higher than that of Punjab.
The top five major states where impact of lockdown was the most pronounced are Karnataka, Jharkhand, Tamil Nadu, Kerala and Odisha.
The five major states where impact of lockdown was the least pronounced are Madhya Pradesh, Punjab, Bihar, Andhra Pradesh and Uttar Pradesh.