Second COVID-19 wave has hard-hit India’s economy, businesses:Report
India is battling second wave of Coronavirus which has severely impacted economic activities
At a time when India’s economy was showing signs of recovery from the first wave of the COVID-19 pandemic in the early months of 2021, it was hit by an unprecedented second wave. States were forced to impose lockdowns and restrictions to curb the spread of the virus which had a negative impact on the country’s recovering economy.
A large number of small and medium businesses in multiple sectors were severely hurt by lockdowns imposed by state governments. With businesses shut down, operational mobility reduced and unemployment rose to further economic distress. Other looming crises due to economic slowdown included rising income inequality, inflation, and sectoral impact.
According to the May 20-27 poll conducted by Reuters, India’s economic outlook for the current quarter lowered to 21.6% annually and 9.8% on average for this fiscal year, compared to 23.0% and 10.4% respectively last month. Leading professional forecasters have cut down India’s growth projections to less than 10% for the fiscal year 2021-2022, including Barclaysand JP Morgan predicting at 9.2% and 9% respectively.
Furthermore, stalled economic activity across the nation has pushed millions of people out of jobs. After localised lockdowns were announced, thousands of migrant workers and daily wage labourers return home resulting in increased unemployment. As per the Center for Monitoring Indian Economy (CMIE), India’s unemployment rate surged to a one-year-high at 14.73% in the week ending May 23. Approximately 7.5 million jobs were lost across multiple sectors in February-May 2021, giving rise to the worst-ever unemployment crisis since liberalisation.
On Wednesday, Prime Minister Narendra Modi said that the economic impact due to COVID-19 is huge, noting the countries across the world will not be the same after the pandemic is over.
“This once-in-a-lifetime pandemic has brought tragedy and suffering at the doorstep of many. The pandemic has impacted every nation,” PM Modi said.
Meanwhile, the Indian government is working on a stimulus package for key sectors affected by the second wave of the novel Coronavirus with the aim of supporting post-pandemic economic recovery after weeks of regional lockdown. As per reports, the Finance Ministry is preparing proposals to strengthen tourism, hospitality and aviation sectors along with small and medium enterprises to aid economic recovery.
Economists have also called for intensifying vaccination efforts to facilitate the reopening of economic activities and boost the recovery process in the country. Amid a vaccine crunch, the Centre and state governments are scrambling efforts to inoculate all eligible citizens by the end of the year.