Covid-19: What you need to know today
I have referred to the Nomura India Business Resumption Index previously in this column – a measure of the extent to which business activities in the country have resumed, with 100 indicating the pre-pandemic (when was that?) level. In February, it was almost there. Now, around three months since, it is back to levels seen last June, after the hard lockdown ended but many of the restrictions on movement and activities remained. In numerical terms, the index is at 64.5. That isn’t surprising. The lockdowns that most states have declared have put a damper on movement, consumption, and business activities. It was clear many months ago that while countries could use a mix of economic measures to alleviate the financial distress caused by the coronavirus disease pandemic, the only sustainable way to address the larger economic challenge was to simply focus on the health aspect. Put otherwise, crush the pandemic, and the economy will find its feet (with a little help). That is exactly what we are beginning to see in the US and the UK (despite cash handouts skewing the labour market in the former).
Given what’s happening in India, it is becoming clear that 2021-22 (or at least the first half of the financial year, and that’s in the best-case scenario) will not be the year of the great bounce-back everyone (including this columnist) expected. Back when those projections of doubledigit economic growth in the year were made, the pandemic was under control (just around 10,000 cases on average across India), and the country had started vaccinating people (it launched its drive as early as January). But carelessness, complacency, poor science, wrong priorities, and a botched vaccine drive (compounded by stubbornness in correcting the course) have resulted in things spiralling out of control. It was almost as if Edward Murphy Jr (of the famous law) was writing the script. HT reported on Tuesday that around 80% of India’s population is living under some form of lockdown. That is likely to continue till at least the end of the month – and there is a high probability that more than half the country’s population continues to live that way till the middle of June. The first quarter then, is pretty much a washout, although the base effect (the economy contracted by almost a fourth in the first quarter of 2020-21) may mean it still ends up showing some growth. Through April, economists and analysts refused to revisit their projections of double-digit growth in India, but they will have to acknowledge the reality on the ground sometime soon (some have already begun doing so). India is definitely not going to show the 25%-plus growth in the April-June quarter that the Reserve Bank of India predicted not too long back.
Will the second quarter be any better? It will likely be. With the learnings of the second wave behind them, state governments will insist on the continuation of non-pharmaceutical interventions such as the wearing of masks and social distancing, and they are also unlikely to allow large events. But things will not return to normal unless the majority of the population has been vaccinated. And that, given the country’s current vaccine strategy (there doesn’t seem to be one), the pace of vaccinations (over 1.9 million on average every day over the past week), and the supply situation (India will be short of vaccines for at least a few months, perhaps even longer), could take till early 2022. Until then, as I recently wrote in this space, states will have to be open to declaring statewide or more localised lockdowns every time there is a flare-up, which will be ever so often, especially given the emergence of more infectious variants of the Sars-CoV-2 virus that causes Covid-19. They will also have to place restrictions on movement and activities that will not bode well for business. I’m tempted to channel Burns via Wodehouse and speak about the best laid plans “gang aft agley”, only, in this case, there doesn’t seem to have been one – a plan, that is.