Virendra Pandit
New Delhi: Of the nearly 400,000 deaths due to Covid-19 in India, around 250,000 were reported during the second wave of the pandemic—in April and May 2021—but the latter’s damage to the Indian economy would be limited to only the first quarter of fiscal 2021-22, according to Moody’s.
The damage due to the second wave and subsequent lockdowns will remain limited to the April to June quarter, Moody’s Investors Service (MIS) said in a new macroeconomic outlook.
“We currently expect India’s real GDP to grow at 9.6 percent in 2021 and 7 percent in 2022,” it said. “With states now easing restrictions, economic activity in May is likely to signify the trough.”
According to the MIS’ assessment, the overall economic effect of the second wave would be softer than that during the first wave of the pandemic in 2020, although delivery of and access to vaccines will determine the durability of recovery, media reported on Friday.
“We expect the current lockdowns to have less of an adverse impact on economic activity than the nationwide lockdown in April 2020 because the latest restrictions have been more targeted, localized, and less stringent.
“Also, consumers and businesses have adapted. The second wave has mainly affected aggregate demand in contrast to last year when the national lockdown also constrained supply.”
The 10 states that have been hardest hit by the second wave collectively account for more than 60 percent of the pre-pandemic level of India’s Gross Domestic Product (GDP). Four states — Maharashtra, Tamil Nadu, Uttar Pradesh, and Karnataka — contributed the largest shares among all states in the financial year 2019-20.
Moody’s said mobility and economic activity will likely accelerate in the second half of the year as the pace of vaccinations picks up. The government recently announced a strategy to centralize vaccine procurement in order to boost vaccinations which, if successful, will support economic recovery.