Covid 19 Second Phase: Raging Second Phase to Pose a Serious Risk to Early Recovery of the Economy
Bristling hopes of economic recovery might get a heft from the latest trend with an impressive performance of the corporates in their last quarter financials of the FY 2021 and more significantly a 32-month rise in the industries output. And a booster of a ‘vaccine dose coming in the shape of the Goods and Services Tax (GST) showing a fresh record collection of Rs. 1.41 trillion for the month of April, a 14 per cent jump compared to collections of previous months, should strengthen the recovery process.
GST collections have consistently crossed Rs 1 trillion marks for the last seven months. Thus, a rebound of the economy was expected with a sustained growth rate in the current financial year. However, the raging Covid pandemic across the country, with its virulent effect in its second avatar, could put brakes to such hopes.
Covid 19 hit the country last year at the same time, in March. But the second phase with avirulent force and galloping speed has been setting records every day with the latest milestone of more than 4,00,000 cases, on Friday.
In the first phase, the economy was shattered not only by the novel corona disease, but the 21-day lockdown accentuated the pace of deterioration, resulting in the growth rate slipping into the negative zone. This time, however, the economy seems to be showing some resilience after the semblance of recovery in the GDP rate turning positive at 0.4 per cent in the third quarter (October-December) of Fiscal 2020-21. And with the Union Budget also giving a thrust with a huge allocation of capital expenditure and some reform-oriented measures to give a thrust to the infrastructure sector, there was to doubt that the economy would suffer any serious setback.
However, though a lockdown of the nature that was resorted to last year was ruled out, strains on the novel corona disease management may pose a dilemma and a repeat of the drastic measure seems to be in the realm of debate. Though the optimism on the economy is still holding its sway, with a few states already resorting to limited lockdown after buckling under severe stress on the resources and healthcare system and shortages of oxygen, anti-virus drugs and vaccine, the economy has taken a minor hit already.
Several retail and wholesale businesses along with passenger cars and two-wheeler vehicles were also said to have suffered a drop in their sales. But the movement of the goods have not been stopped and industries are being allowed to function and significantly limit the economic loss.
A little comfort can be drawn from the recent forecasts by the Reserve Bank of India (RBI) and the International Monetary Fund (IMF) respectively estimating the GDP to grow during fiscal 2021-22 to be 10.5 per cent and 12.5 per cent. However, the Vice Chairman of NITI Ayog, Mr Rajiv Kumar has said growth projection for the FY2021 (the fiscal just ended) could not be given now given the prevailing uncertainty. However, he felt that if India could achieve 50 per cent vaccination by the end of this year (2021), then economic activity was bound to bounce back adding this would be possible with the various economic reforms undertaken over the past eight months.
Though economists’ outlook coincided with the two monetary agencies’ optimism, professional analysts have flagged the pandemic scourge to have a disruptive effect, what with the limited lockdown frustrating the general sentiment.
The laxity in the disease management had prompted even the Supreme Court to takecognisance of the situation. The Apex court put searching questions to the government aboutits plan to combat the Covid menace.
The government reiterated its recent decisions to fast track its emergency use approval to a clutch of foreign pharma companies, some of whom have already tied with Indian partners.
Among them, Russia’s Sputnik V has already been accorded approval. The others are Pfizer-Bharat BioNTech, Johnson, and Johnson, besides the two Indian companies—Serum Institute of India and Bharat Biotech, who are also planning to produce different types of vaccine. The Russian vaccine will be imported initially, and it will be produced at Reddy’s Labs, Hyderabad.
Thus, the second phase of the Covid surge in the covid cases is writing a fresh scenario that has become difficult to grasp and forestall any major setback. Yet, to prevent any such eventuality and the pandemic repeating its potential to wreak a havoc should be effectively checked in the initial stages before it overpowers all efforts to prevent a major disaster.
Experts opine that the pandemic must be fought on the strength of transparency in the data about tests, facilities available to draw up a sound plan, besides sound strategies for the disease management should be put in place soon. The immediate and most effective way to beat the coronavirus menace would be by stepping up the supply of vaccine supply to support the expanded inoculation programme along with an unfettered supply and distribution policy to aid the states to take timely actions to break the chain of virus infection.
The vaccination programme lags far behind the target of achieving herd immunity and with just only 1.7 per cent of its population. Supply constraints were evident on the first day of the launch on Saturday of the expanded vaccination programme for all adults over 18 and under 40.
Successful mass vaccination has helped the two major economies of the USA and China claiming to have controlled Covid 19 case and impacting on the sound recovery of their economies.
As the second phase of the pandemic is expected to last for more than two years, the Indian economy may face a short-term disruption. Thus, a long-term policy prescription with a view to ensuring adequate capacity is equally important to insulate the economy from facing any severe future shock.
Mr V.K.Varadarajan is a veteran journalist and colulnist
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