Signs of dents in the economy seen but too Early to gauge actual impact.
The second wave of Covid 19 has struck its second target—the economy. Though the impact appears to be moderate, the panic and apprehensions over uncertainties resulting from the unprecedented breakout of the pandemic loom large. Even as the government took by its decision not to declare a national lockout, steps taken by a few states curbing restrictions of movement and congregations in public places and small commercial establishments have set off reactions among the small and informal sector of businesses.
Coming amidst the confusion over the overall situation arising out of the massive
spike in the coronavirus infection cases soon after its decline in the middle of
February, the Union Finance Minister, Ms. Nirmala Sitharaman’s meeting with
industry chambers and her statement that the government was working state
governments to save the lives and livelihood of people came as a solace to the
She is also understood to have allayed fears of a full lockdown.
In their interaction CEO’s leading corporates are learnt to have expressed their
concern over the Covid 19 situation. Barring a few who said that, if a harsher
containment was necessary for a disease control management localized containment zones with limited lockdown was preferable to a complete lockdown.
The government, which tool a series of decisions in the last few days to come up with the evolving crisis, was also confident that it was well prepared to combat the effects of the second wave on the economy.
The government on Monday announced that the vaccine coverage would be extended for all above 18 years of age, starting from May 1. While this measure is expected to instill a fresh hope in handling the Covid situation, a reflection was also evident from the Stock Exchange reaction on Tuesday (April 19) with the BSE Sensex recovering from Monday’s crash.
The market rose by 450 points against its dip on Monday when
it tumbled to a low of around 14,500 points. The crash was attributed by market
analysts to the economic fall out of the second wave with a stronger resurgence.
Pharma Index continued to bulwark the index since its last week’s performance
at the back of recent announcements to mitigate the shortages in oxygen,
vaccination, and anti-Covid drugs, including, Remdesivir.
However, with the risks to economic recovery posed by the severity of the
second wave, analysts revised the GDP projections (Gross Domestic Product) for
the current financial year (2021-22) to 10 percent on local lockdowns threatening a fragile recovery. After recording a consecutive dip in its growth since 2017 and contracting from two quarters in of the financial year 2020-21, the economy expanded to post a growth of 0.4 percent during the October-December quarter of the same fiscal.
The RBI had in its April bi-monthly policy review has projected the GDP growth at 10.5 percent for the fiscal 2021-22t, while IMF puts it at 12.5 percent. The World Bank sees 2021-22 growth at 10.1 percent. However, RBI had also flagged the second phase Covid 19 pandemic as a possible spoiler to the recovery sings in the economy.
Meanwhile, the series of measures taken by most states in the North and South, including night curfew and various restrictions to curb large gathering a congregation in public places, commercial establishments, and social and religious functions, people were worried about the impact of such decisions on their jobs.
Limited lockdown in many cities of almost all states has triggered a
reverse migration of workers from informal sectors, who fearing threat
to their livelihood.
Maharashtra, Uttar Pradesh Delhi, and Karnataka were among the worst
states forcing them to impose localized lockdown in their cities. The supreme court has stayed the Allahabad High Court of lockdown in five cities of UP.
Meanwhile, the retail inflation rose to 5.52 percent in March, mainly on account of higher food prices triggering concern about the consumer demand that had picked up from the festive season in September last. Small vendors lamented about the weak sales during the current festival season of Ugadi, Gudi Padwa and Baisakhi, Naba Barsha, and Vishu. Celebration of these festivals signifies the ushering in of the New Year with a fresh harvest promising prosperity and happiness, usually lifts the consumer demand in major and small businesses. This year the buying spree saw a dip in enthusiasm due to Covid 19.
Note:Mr. V.K.Varadarajan is a veteran Journalist and columnist.
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