Real gross domestic product ( GDP) of the country is now predicted to contract 10.9 per cent in the 2020-21 fiscal year, State Bank of India (SBI) said in a report released on Thursday. Previously, the annual GDP contraction was estimated at 6.8 per cent, the largest lender in the country said in its Ecowrap report. The downward revision in the economy’s annual forecast comes days after official data showed the country’s GDP contracted 23.9 per cent in the quarter ended June 30, in its worst recorded performance due to the central government’s national lockdown on March 25 to curb the spread of the coronavirus pandemic.

Industry was worst affected in the first quarter of current financial year, with a decline of 38.1 per cent during the period, compared to a growth of 4.2 per cent in the corresponding period a year ago, according to the report.

The services sector saw a decline of 20.6 per cent in the quarter ended June 30, 2020.

According to the report, agriculture provided the only silver lining. The sector grew by 3.4 per cent during the first quarter as the government had provided leeway to the farmers to undertake cultivation activities.

Moreover, the pandemic had not made much inroads into the rural sector. However, the second quarter could be different as the COVID-19 has spread its tentacles into rural parts of the country.

The real GDP may decline in the range of 12-15 per cent in the second quarter (July-September), and 5-10 per cent in the following quarter (October-December), according to the report.

The report, however, highlighted some positives.

The credit increased to all major sectors in the month of July, with the exception of the industrial sector. There was a significant increase in credit to the MSE, agricultural and allied services sectors. New projects were announced in roadways, basic chemicals, electricity and community services such as hospitals and water sewage pipelines.

The report by SBI bats for revival of sectors such as construction, trade, hotels and aviation. It calls for restoration of transportation services and giving a push for the infra space by issuing special bonds such as perpetual bonds to the RBI. It also suggests that states should be supported through fiscal measures.

Official growth data released on Monday by the National Statistics Office (NSO) estimated India’s Q1 GDP at -23.9 per cent, which is the lowest among major economies in the world and the country’s worst quarterly growth performance in more than four decades.

Soon after the figures were made public, economists said India could face a number of permanent long-term growth hurdles as a result of the sharp contraction. Creating jobs may be one of the biggest challenges for India in years to come.

The employment outlook in India was deteriorating since 2019, but the coronavirus pandemic has made matters far worse.

Urban employment, which represents a bulk of salaried jobs in the country, is dwindling with every passing month, according to recent reports by the Centre For Monitoring Indian Economy, a Mumbai-based think tank.

Over 18.9 million salaried individuals or 21 per cent of the overall workforce had lost their jobs due to the pandemic as of July. The figure has worsened in August.

The rising unemployment rate in August also indicates that one in every 10 people living in urban areas does not have a job. Meanwhile, overall unemployment in August also inched higher in comparison to July. The falling rate of unemployment casts a shadow over the future of India’s growing young population.