Covid-19 impact: ‘States’ GDP to shrink up to 14.3% in FY21’

Gross state domestic products (GSDP) of all states are expected to contract 1.4-14.3 percent in the current financial year 2020-21, with Goa, Gujarat, Sikkim, and Assam expected to record a double-digit contraction in GSDP rate, India Ratings and Research said.

In percentage terms, Goa is expected to record the highest GSDP rate contraction of 14.3 percent, followed by Gujarat with 12.4 percent contraction, Sikkim with 10.9 percent, and Assam with 10.7 percent.

States having a higher share of agriculture are expected to have suffered less compared with the ones which have a lower share, the Fitch-group company said in its report. 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 owing to the high penetration of digital platform in their business operations, thus, having less impact on the states where the share of these services is high, it said.

The top five major states where the impact of lockdown was the most pronounced are Karnataka, Jharkhand, Tamil Nadu, Kerala and Odisha, whereas, the five major states where impact of lockdown was the least pronounced are Madhya Pradesh, Punjab, Bihar, Andhra Pradesh and UP, it said.

With regard to states’ revenues, India Ratings said that states that are likely to be impacted more in FY21 are the states whose share of states’ own tax revenue in the total revenue is higher, with the most vulnerable states in this respect expected to be Maharashtra, Gujarat, Tamil Nadu, Kerala, Telangana and Haryana.