Did some numbers;

Based on whatever we know so far, I expect FY Q2 at -9 to -11%.

This is considerably better than Q1 and points at a sharper than anticipated recovery.

Q3 so far looks pretty good. I expect econ contraction to be under -7%.
At the moment, I am not making any forecasts for the coming financial year. There are several outcomes and far too many unknown-unknowns on that front.

But I do agree with the prospects of double-digit growth as mentioned by @dravirmani sir.
The key takeaway: even though contact services are yet to be normalized, growth in essential services and the rest of the economy seems to offset the impact of lower activity in contacts services on aggregate GDP figures.
For reference do read - egrowfoundation.org/research/growt…
What this also means is that the revenue impact of pandemic + lockdowns may not be as severe as what was anticipated earlier. Indirect tax collections for instance do reflect some of this. The problem on tax collections will be more prevalent on the direct taxes front though.
States must reflect on the problem & constraints faced by the union government. That it assisted in meeting the GST shortfalls by facilitating borrowings was a gesture in good-will that should be reciprocated by state govs trying to push for reforms + econ growth in their states.

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More from @karanbhasin95

22 Nov
I will say it again: states that impose localised lockdowns have no right to ask for GST compensation later. As a matter of fact, they should compensate the central & other state governments for tax shortfalls owing due to their inability at handling the situation.
It’s all about incentives; whether positive or negative. Right now states have no incentives - at least those that don’t have elections in the near future. Let us fix the problem of incentives and we shall have governments function efficiently whether at state or local levels.
Let me rephrase the first tweet in the form of a Q:
Why should states, that due to their inability to contain the virus impose localized lockdowns, benefit from the 14% guaranteed growth in GST revenues?

More so as localized lockdowns will invariably hit overall GST collections.
Read 4 tweets

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