Risk of inflection
- The robust growth expectations of India's economy this fiscal year may be at risk if the resurgence in covid cases is not quelled quickly.
Several independent agencies have forecast India’s gross domestic product to expand at a double-digit rate in 2021-22. Moody’s, for example, sees the economy growing by 13.7% on the shrunken base of 2020-21. The Reserve Bank of India expects a 10.5% expansion. However, growth is now at the risk of inflection by a stunning surge in coronavirus infections, prompting localized clamps in the key industrial states of Maharashtra, Karnataka and Gujarat. By now, the country should have a better grasp of an optimal application of curbs to balance lives and livelihoods, but our second wave caught us off guard, and covid fatigue has upped our vulnerability.
France, which is facing a third wave, has just cut its 2021 growth forecast to 5% from 6%. If India’s surge is not contained soon and partial lockdowns widen, we could have a re-run of last year’s supply-chain disruptions, imperilling our economic recovery. While lockdown resistance is rife in business circles, it could well turn out that saving lives must again take precedence in cities where the pandemic is set to overwhelm our healthcare capacity. There are no easy choices, but this wave needs to be quelled.
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