The importance of the first quarter

The Reserve Bank of India (RBI) kept its growth 2021-22 estimate unchanged at 10.5%, even as it warned of the risks of a second wave of Covid19. Its projection across quarters for the financial year 2021-22 is 26.2%, 8.3%, 5.4% and 6.2% respectively. The first number, 26.2%, shouldn’t be a surprise. The economy contracted by 24.4% in the AprilJune quarter of 2020-21, the direct impact of the 68day lockdown. With cases declining to less than 10,000 by February, it looked like India would dodge the second wave. The launch of India’s vaccine drive, with the original aim of vaccinating 300 million people by June, made economic prospects for 202122 look good. But the second wave has gathered momentum since. India’s daily case count has crossed the peaks seen in the first wave. And HT’s analysis shows that deaths, with a two-week lag behind cases, are following the same trajectory they have done since October. States seeing a surge, including Maharashtra, have instituted restrictions.

This is understandable. All governments have to maintain the balance between lives and livelihoods, especially after the experience of the first lockdown — it may have been required to scale-up health infra, but it caused economic distress, making a repeat inadvisable. But even a partial lockdown will hurt, as will any restrictions on activities — which is why the second wave threatens the sanctity of RBI’s projections. The most important thing now is the economy. If the first quarter projection pans out, the economy is on the right path; if it doesn’t, 2021-22 is off to a rocky start. There’s no more pressing argument for Covid-19-safe behaviour and the acceleration and expansion of the vaccine drive.