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Eight states most affected by COVID-19 pandemic account for over 60% of GDP: Crisil
May-20-2020

Domestic rating agency Crisil’s research wing in its report has said that eight states most affected by the COVID-19 pandemic account for over 60 per cent of the Gross Domestic Product (GDP) and the extended restrictions will slam the economy harder. The eight states, which include Maharashtra, Gujarat and Tamil Nadu, among others also account for 58 per cent of the employment. The share of gross state value added (GSVA) from these states is 64 per cent in agriculture, 63 per cent in industry and 53 per cent in services.

It mentioned that Maharashtra, Tamil Nadu and Gujarat, being most dependent on output from industry and services, are more vulnerable to output losses as they face restrictions. Andhra Pradesh, Rajasthan and Uttar Pradesh are fiscally more vulnerable due to relatively higher debt ratios and also have high dependence on revenue sources from petroleum, liquor and stamp duty. It added those with higher dependence on agriculture like Andhra Pradesh, Rajasthan, UP and West Bengal could fare better as a normal monsoon is expected to support it.

Among the relatively less-hit states, restrictions on economic activity could hurt Karnataka and Kerala, where share of industry and services is higher, while in others like MP, Punjab and Bihar, a higher share of agriculture could cushion the economy this year. Besides, it noted that the top eight states have been selected as per the districts affected as of the end of the third lockdown on Sunday. It said at the all-India level, the virus spread and lockdowns, and restrictions have pummelled economic activity. While all states were near- uniformly hit during the first and second lockdown phases, the third and fourth would impact them differently.

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