Viral spike dim’s India’s recovery
Emerging as a new epicenter of the coronavirus pandemic, India has surpassed Brazil to report the second largest number of daily infections. Latest figure showed that the nation registered over 180,000 cases within 24 hours.
With the new wave of ferocious resurgence, the Indian economy, which has just shown signs of upturn, is facing a severe risk of breakdown. The resurgence again triggered new restrictions and lockdowns in parts of India.
With daily confirmed cases keep hitting new records, India is facing a highly contagious variant which may cause fallout even worse than the earlier rounds of the outbreak in 2020.
Lockdowns in economic hubs like Maharashtra and
Delhi will cost the economy roughly $ 1.25 billion each week and negatively impact the GDP in the first quarter of fiscal year 2021- 22, India Today reported, citing economic analysis.
IMF economists warned that the growth outlook for India comes with significant downside risks because of the current resurgent infections in the country, though the organization has recently raised GDP forecast of India to over 12 percent in 2021- 22.
Though India is a major vaccine manufacturing power and has suspended vaccine exports to meet domestic demand, inoculation efficiency is not quite satisfactory right now. Per tracking data by The New York Times, 7.2 percent of the Indian population got vaccinated and only 1 percent fully vaccinated. The country still has a long way to reach herd immunity.
A growing certainty is that India’s short to medium- term economic outlook is increasing dim.
Unlike advanced economies which are more resilient, with relatively sufficient medical and living supplies to withstand the pandemic hit, India enters the crisis with serious problems in its economic structure, already sloweddown growths and heavy external debt.
Recently, 57 countries have jointly required India to pay back as much as $ 13 billion in debt, according to press reports.
There are observers who believe that the Indian economy may remain sluggish for an extended long time even after the public health crisis is put to an end, not to mention its ambitious intention to leapfrog Japan and China to become a major economic power.
For a long period of time, New Delhi has believed that a global value chain adjustment is an inevitable trend, and India needs to seize the opportunity to replace China’s role or take over parts of China’s manufacturing capacity. It is never a realistic plan, even without the pandemic.
In addition to its serious structural woes, insufficient infrastructure and societal problems, Indian economy, essentially, has been deeply trapped by its feverish nationalism. By cracking down on foreign investments to cater domestic plutocrats, New Delhi has dampened the vitality of its economy.
To sum up, the main focus for India is to roll out strict prevention measures now to contain the new wave as soon as possible.
Only by putting the crisis under control, can it to re- focus on economic reboot; and what’s most crucial for India is to open up its market and actively integrate into the Asian value chain. Being trapped by domestic interest groups will only forfeit the future of the once seemingly promising emerging economy.