‘2nd wave had a larger human cost’
NEW DELHI: As virulent virus strain and stretched hospital capacity have resulted in a sharp rise in fatalities, Nomura said India’s second wave has likely peaked, but has unleashed a devastating human cost.
“The second wave has exacted a large human cost, but we expect its economic impact to be localised in Q2FY22,” Sonal Verma and Aurodeep Nandi, economist, Nomura said.
They expect the overall hit to sequential growth in the second quarter will be much less severe than last year, as lockdowns are more nuanced this time and consumers and businesses have adapted, a view supported by international evidence.
It estimates the gross domestic product (GDP) to shrink by 3.8% quarter-on-quarter, and overall GDP growth likely at 9.8% year-on-year in 2021 and 10.8% in FY22 (year-ending March 2022).
Nomura expects restrictions to start being relaxed from June (in states like Maharashtra) and mid-june for others, but mainly in sectors that are not contact intensive; restrictions in contact-intensive sectors may remain in place for a while longer.
Even as vaccinations are trailing, Nomura says vaccine supplies will rise sharply after June. It estimates India’s upcoming vaccine supply can fully inoculate around 10.5% of the population by end-july, 26% by end-september, and potentially 52% by end-2021.
India has inoculated around 184 million people so far (13.4% of the population), with 10.3% of the population receiving the first dose and 3.1% fully vaccinated. The current supply capacity is unable to keep pace with the rising demand for vaccines amid the second wave.
The case fatality rate in the second wave (around 1.1%) is lower than during the first wave (around 5% at its peak), but the mortality rate has risen over the last month due to overcapacity issues at hospitals, Nomura said.