Growth might be impacted by up to 0.30 per cent in the March quarter as normal economic activities come under pressure due to restrictions being imposed by more states to curb rising Omicron cases, economists at the country's largest private sector lender HDFC Bank said on Tuesday.
The economists said they were earlier estimating Q4 growth to come at 6.1 per cent, which can get impacted by 0.2-0.3 per cent because of the Omicron threat.
"With states imposing COVID-related restrictions (night curfew on movement of people, restaurants allowed at 50 per cent capacity, offices to operate at 50 per cent capacity in various states), economic activity is likely to get impacted in Q4FY22," they said.
The downside risks at the current juncture emanate from more states imposing restrictions, the restrictions extending beyond January 2022 and also a slowdown in global recovery which will weigh on the exports, they said in a note.
Experience from previous waves during the COVID pandemic suggests that restrictions are imposed on mobility as COVID cases rise, which in turn has an impact on economic activity, they said.
It said the Omicron cases are spreading at a faster pace in India and about 60 per cent of the overall infections are reported to be that of the new variant.
The overall Omicron tally stood at 1,700 as of Monday but the actual number could be higher as India has very few testing facilities to check genome sequencing, it said, adding that some media reports peg the total Omicron cases at 18,000 in the country.
The note also said that despite the threat of the Omicron, the rupee will stay range bound between Rs 74-76 to the greenback, and added that the RBI will intervene if the need arises.
Rate hike expectations will moderate as the growth gets impacted and the reverse repo hike expected in February is also uncertain now, it said, adding that the central bank will continue with its focus on liquidity normalisation and capping yields.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU