India’s per capita income to decline by 5.4% in FY21: SBI report

Our Bureau Mumbai | Updated on June 23, 2020

Rich States will lose more than national average, says SBI Economic Research Department

India’s per capita income (PCI) will decline 5.4 per cent in FY21 to ₹1.43 lakh. This decline in PCI is higher than the nominal GDP decline of 3.8 per cent, according to a report authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.

State-wise, the results are quite startling. SBI estimates suggest that rich States (those whose PCI is greater than the all-India average) will be the most affected in PCI terms. In Delhi (-15.4 per cent) and Chandigarh (-13.9 per cent), the decline in PCI is almost thrice the decline at the all-India level (-5.4 per cent).

States like Maharashtra, Gujarat, Telangana, and Tamil Nadu are expected to witness a decline of 10-12 per cent in PCI in FY21. A total of 8 States and Union Territories are expected to witness a decline in PCI in double digits in FY21 and that is most alarming. These States and UTs constitute as much as 47 per cent of India’s GDP.

However, in the relatively less well-off States like Madhya Pradesh, UP, Bihar and Odisha (where the PCI is below the national average) the projected decline is less than 8 per cent. “Thus, quite intriguingly, we expect that inequality gap in India will narrow down post-Covid pandemic as the decline in the income of rich States will be much greater than the decline in the income of the poor States,” the SBI report said.

“The current crisis is testing the policymakers’ acumen to its limits as we have not seen anything like this before. Past crises were financial in nature and were precipitated by a change in investor sentiments and the epicentre was identifiable, which suffered the maximum. But support from other regions propelled the world economy forward. However, this crisis is such that the GDP growth of every country is in contraction mode at least for 2020/FY21,” said the report from the SBI Economic Research Department.

Published on June 23, 2020

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