The economic research wing of the State Bank of India has projected a GDP growth rate of 8.8 per cent for the fiscal, down from its earlier estimate of 9.3 per cent.

The National Statistics Office has forecast a GDP growth of 9.2 per cent in its first advance estimate on January 7. The NSO will come out with its second advance estimate and the third-quarter estimate for the fiscal on February 28.

The SBI report said they expected GDP growth in the third quarter of Fiscal 2022 at 5.8 per cent with a downward bias. The economy grew 8.4 per cent in the second quarter to cross pre-pandemic levels. The second-quarter growth was slower than the 20.1 per cent expansion in the first quarter.

The SBI team for their projections use their Nowcasting Model — based on 41 high frequency indicators associated with industry activity, service activity and the global economy.

The real GDP will grow Rs 2.35 lakh crore or 1.6 per cent higher than the real GDP of Rs 145.69 lakh crore of the last fiscal, the report said. Recovery in domestic economic activity is yet to be broad-based as private consumption remained below pre-pandemic levels.

The high frequency indicators suggest some weakening of demand in the third quarter continuing to January 2022. Rural demand indicators such as two-wheeler and tractor sales continue to decline — a trend noticeable since August 2021.

Livelihood loan

The report said the Centre should consider a livelihood support loan up to Rs 50,000 for the rural poor as the lingering pandemic appears to be taking a toll on the nascent recovery in the rural economy.

An interest subsidy of 3 per cent can be offered on the loan, which will raise the burden on the government up to Rs 1,500 crore.

The report said the loan should be considered as standard if the borrower repays just the interest component of the loan.