SBI business activity index hits new low in April due to COVID-19 pandemic

The COVID-19 pandemic has not just affected the health of the nation but also the economic conditions of the people and the institutions. This can be very well understood by an SBI Ecowrap report that has shown how the pandemic is affecting the business activity of the biggest bank in the country.

State Bank of India's (SBI) business activity index has declined to hit a new low of 75.7 in April 2021. The index is 24.3% down from the pre-pandemic level. The bank had earlier attained this level in August 2020.

"SBI business activity Index which has been declining in April 2021 has now dipped to a new low of 75.7, the level it had attained in August 2020 and now a clear 24.3% down from pre-pandemic level," it said. 

The SBI's economic research report also revealed that except for labour participation and electricity consumption, all other indicators have declined significantly during April.

SBI expects an FY22 growth projection at 10.4% for real GDP (gross domestic product) and 14.2% for nominal GDP. The Reserve Bank of India's (RBI) projection for growth is 10.5%, but analysts, including in SBI, have started revising their growth projections down.

The recovery rate was noted at 97% in the country at the beginning of the second wave which is now at 82.5%, said the report. The reduction of 14.5% in the recovery rate has happened over a period of 69 days.

It added that every 1% reduction in recovery rate takes around 4.5 days, which means that it will take around 20 days from now to reach the peak. Also, every 1% reduction in recovery rate increases active cases by 1.85 lakh, the report said. 

Hence it is believed that around mid-May, India will witness the peak of the second wave with active cases reaching around 3.6 million or 36 lakh at that point of time.