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WILL THE SECOND WAVE OF COVID-19 DERAIL INDIA’S ECONOMY?

The Second wave is covering India’s economy under its shadow like a dark cloud. Each day, the number of COVID cases is rising, and the second wave is no longer only Maharashtra-centric, but it has spread all around the country. Every week shows more average cases than its prior week, which makes the second wave a potential tsunami.

The second wave has arrived at a time when India’s economy was just reviving from the losses faced during the first wave.

Several states/regions have imposed night curfews, complete lockdowns, and weekend lockdowns, due to which small-scale businesses, travel/tourism industry, food industry, factories, workshops, and several other sectors are facing heavy losses.

Even the daily wage workers are losing their contracts/jobs and returning back to their home states. Last year, the condition was no different for them. All these factors are together threatening India’s economic recovery.

Firstly, the lockdowns are currently imposed only in a selected number of states/regions having a high concentration of the fresh COVID cases, and the remaining states have restrictions on few activities.

The transportation and contact-based services are likely to be hit, yet they remain operational on much lower capacity levels. Other economic activities like – trade, agriculture, communication, and construction will largely remain unaffected by the lockdowns.

Secondly, the consumers and firms are swiftly adapting with the new-normal and the connection between (weak) economic activity, and (lower) mobility has weakened over time.

The lockdown will lower the demand for power (electricity) once again. Other than this, public transports (local trains, metros, buses, and monorails) are expected to generate lesser revenue during the lockdowns.

However, in the upcoming quarters of this year, some bright spots are expected to arrive.

The COVID-19 vaccination in India is progressing rapidly, and its pace is expected to accelerate further. Around 40-45% of India’s adult population is expected to get fully vaccinated by the end of 2021.

As the vaccination drive progresses, the long-shut places like the corporate offices and educational institutes are likely to be re-opened. This will give a boost in economic activities once again. The GDP growth shall remain positive in the 4th quarter of 2021.

But, right now, our main focus should be on fighting with the second wave of COVID-19, by following all the COVID protocols and curb the third wave from getting triggered.

Source: The Indian Express

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