|
|
|
'India's Covid2.0 'humanitarian rather than economic' crisis'
|
|
|
|
Top Stories |
|
|
|
|
SME Times News Bureau | 19 May, 2021
Indias second Covid wave is a humanitarian rather than an economic crisis, according to Japanese brokerage, Nomura.
"India's
second wave has likely peaked, but in its wake, it has unleashed a
devastating human cost. A more virulent virus strain and stretched
hospital capacity have resulted in a sharp rise in fatalities," the
report said.
It is not an economic crisis. The report says the
hit to mobility due to the rolling state-wide lockdowns has been steep,
and the economic impact is likely to be most severe in May. However, we
expect the overall hit to sequential growth in Q2 (April-June) to be
much less severe than last year and less than what the drop in mobility
suggests, as lockdowns are more nuanced this time and consumers and
businesses have adapted, a view supported by international evidence.
"We
expect lockdowns to last for around six weeks and be followed by
selective reopening in June, which should result in better sequential
growth. We expect the pace of vaccinations to accelerate after June:
Vaccinations are trailing currently, but our analysis of vaccine
supplies suggests the pace will rise sharply after June. We expect half
of the population to be fully vaccinated by end-2021 and India to reach
its vaccine pivot point in Q3, which should boost domestic consumption,"
the report said.
As pandemic uncertainty ebbs and vaccinations
rise, the full impact of easy financial conditions on growth should also
become visible. Overall, we expect the second wave impact to be
localized in Q2 (April-June), with GDP contracting by -3.8% q-o-q, much
less than during the first wave (-24.6% in Q2 2020), and overall GDP
growth likely at 9.8% y-o-y in 2021 and 10.8% in FY22 (year-ending March
2022).
Inflationary pressures appear set to intensify. Nomura
sees cost pressures intensifying from supply chain disruptions, high
global commodity prices and rising rural wages, some of which will
likely be passed on to consumers. We believe core inflation will remain
elevated at 5.3% y-o-y in 2021, topping the already-elevated 5.1% in
2020.
Despite the second wave shock, India's business cycle
remains on an uptrend. The report says the second wave has exacted a
large human cost, but we expect its economic impact to be localised in
Q2 and muted overall.
Faster vaccinations after June, strong
global growth and easy financial conditions are likely tailwinds to the
ongoing business cycle recovery.
India's second wave likely
peaked in early May. During this wave, a new ‘double mutant' variant of
the virus was discovered, which has been found to be more infectious
than the variant that was responsible for the first wave; this likely
resulted in the rapid transmission of the virus at a time when pandemic
fatigue had set in and the economy was re-opening. However, in line with
experts' expectations, the pandemic curve seems to be correcting, the
report said.
The official daily death rate is tracking at around
4100 (7-day MA), which marks a slight moderation in the growth rate to
2.5% w-o-w from 6.9% last week.
The situation remains mixed:
among the states with the top 6 case loads (15k-40k daily cases)
currently, the pandemic curve for Maharashtra -- the epicentre of the
second wave -- has clearly inflected, while Karnataka, and to a lesser
extent Kerala, are starting to show incipient signs of flattening.
However,
states like Tamil Nadu, Andhra Pradesh and West Bengal are at risk
given their high case loads and inability to flatten their curves yet.
For
the next five states (around 9,500-15,000 daily cases), most states
have inflected, most significantly Uttar Pradesh. Odisha remains the
outlier with an increasing pace of cases. For the next five states,
again we find encouraging signs of flattening among most states, except
for Punjab, where the curve has yet to flatten materially.
The
case fatality rate -- daily deaths as a share of new infection cases --
under the second wave (around 1.1%) is lower than during the first wave
(around 5% at its peak), but the mortality rate has risen over the last
month due to overcapacity issues at hospitals. Given the mortality rate
lags new infection cases by a few weeks, daily deaths, which have risen
to an average of 4100 per day from 300 at end-March, may remain high,
the report said.
The current supply capacity is unable to keep
pace with the rising demand for vaccines amid the second wave, resulting
in the daily pace of inoculation rising from less than 0.5mn doses per
day in early February to a peak of close to 3.5mn doses per day in
mid-April, but since slowing to 1.6mn per day as of 18 May (7-day MA),
the report said.
The priority is now given to those scheduled to
receive their second dose, with the pace of first dose starting to
fall. More recent concerns include whether these vaccines are effective
against the double mutant strain. Research is still ongoing, but a
recent study by the Indian Council of Medical Research (ICMR) and the
National Institute of Virology suggest that Bharat Biotech's Covaxin is
effective against the Brazilian, British, and the Indian mutants of the
virus.
The vaccination pace varies across states. The states
with the highest vaccination rates (20-32% of population) are Himachal
Pradesh (HP), Goa, Kerala, Chhattisgarh, Gujarat, Delhi and Rajasthan.
Of these, HP and Goa appear relatively low risk (below 10k cases/day),
Kerala is high risk, and others are in the medium-risk category.
The
next cohort of vaccinated states (i.e., where 15-20% of the population
has been inoculated), includes Maharashtra and Karnataka among the
high-risk states, and Haryana and Odisha are among the medium-risk ones.
Among the states with a lower proportion of population vaccinated,
Tamil Nadu is concerning given its rising cases, as are states like West
Bengal and Andhra Pradesh that have yet to materially stabilize their
pandemic curves, the report said.
|
|
|
|
|
|
|
|
|
|
|
|
|
Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
|
|
Daily Poll |
|
|
PM Modi's recent US visit to redefine India-US bilateral relations |
|
|
|
|
|
Commented Stories |
|
|
|
|
|
|
|
|