Tuesday, April 13, 2021

The Second Wave, Lockdown and Indian Economy

The number of new infections a day has already crossed the previous peak of 97,860. On 11th April 2021, a total of 1,69,914 new infections were recorded [1]. Most importantly, these numbers are increasing every day. At present there is not a single state which is not reporting higher numbers than the previous day. The most important part of the whole story of the second wave of infections is that it is happening despite the fact that India has been able to successfully flatten the corona curve with less than 10,000 daily infections. The battle which India had almost won by flattening the corona curve is now again in the courtyard of India.


India as a nation has failed herself in the fight against the COVID19 by letting her guard off. It is happening when India has already administered more than 100 million doses of vaccines and is administering more than 3 million doses of the vaccine every day! This really poses a question if India as a nation and society has learned anything from the previous experiences? Or has India unlearned all the experiences it gained from the first wave of coronavirus infections? From the prevailing situation, it can comfortably be said that besides the medical professionals (low case fatality rates) and the policy makers (no knee jerk policy response), India has learned very little or nothing!

Across states and cities, citizens and the state governments as well as the local administrations have not been serious enough. Everyone perhaps had come under the impression that the pandemic was over after the beginning of the vaccination in India. People had become carefree and were moving around without following social distancing norms. Political parties across political lines have been and are campaigning and conducting rallies after rallies where thousands of citizens are congregating. For most of the people in the country, the most effective tool and weapon (social distancing) against the COVID19 infections have become a thing of the past! Reliance on vaccines has an upside but complete reliance at such an early stage when even 10% of the total population has not been vaccinated is proving counterproductive.

Increasing Coronavirus Infection

With every passing day, the total numbers of the new coronavirus infections a day are increasing and hitting new peaks. In the last 24 hours, around 1.7 lakh new cases have been recorded across India which is almost double of the peak of the first wave. In every single state, the numbers of reported new infections are increasing and many states like Delhi, Maharashtra, Chhattisgarh, West Bengal, Rajasthan, Punjab, Karnataka, Tamil Nadu and Uttar Pradesh etc. are recording the highest ever new COVID19 infections [2]. The total numbers of new infections from the top five states namely Maharashtra, Uttar Pradesh, Delhi, Karnataka and Chhattisgarh have contributed more than 64% of the total of countrywide new infections and 69 percent of total deaths on 11th April 2021. However the gravity of the pandemic has reached the inflection point. The government of Maharashtra must act fast.  
The 7 days average of the number of new infections and active cases in India are 1,33,921 and 65,441 respectively. The total number of active cases in India has already crossed the mark of 12 million and is the highest ever. Numbers of death every day are also increasing but with lower case fatality rate of 1.3 percent due the medical experience gained during the first wave along with a positivity rate of 5.2 percent. The way new infections are increasing, it is quite possible that by the end of next week India may cross 2 lakh cases a day. But considering the previous experiences of the first wave, it would not be a bad proposition altogether. The sooner India hits the coronavirus peak in this wave, better it would be to control and minimize the human and economic losses. However, the numbers of tests across all the states are again increasing after a pause due to flattening of the coronavirus curve, but there is a need to increase the testing manifold. The testing must increase by four to five times to detect every possible carrier (asymptomatic and symptomatic) of COVID19 virus to break the chain and India must intensify its vaccination drive and should make the vaccination available to every adult. Also the states governments are in habits of decreasing testing once positivity rate falls. This should be done away. Many states are now again facing difficulties in providing healthcare services [3]. There are long queues outside the vaccination centres [4]. Migrant labourers are going back to their hometowns [5]. It should be avoided as India is repeating the mistakes again.  

Increasing Cover of Lockdown and Vaccination

 As a result of increasing numbers of new coronavirus infections, many states have already imposed night curfews in many cities. Many states are planning complete or staggered lockdowns in many cities. Almost every state has already imposed restrictions on social gatherings. However, considering the ground realities, the night curfews seem to be of no use and are just symbolic as the people’s movement is negligible during nights across India and may not be helpful. Complete lockdown is not a viable option for India now as it could only delay the spread in the first wave. Also the states and central governments along with people cannot afford another national lockdown like the previous one due to the huge fiscal deficits and falling income of people. There is just one option and it is intensifying the vaccination. There had been a lukewarm response to vaccination drives earlier till the Indian Prime Minister himself didn’t take the first jab of the coronavirus vaccine. This indicates that the top leadership of the country can change the behaviour of the citizens. So the top leadership should put more and serious efforts toward social distancing norms so that citizens also start observing the social distancing norms. Apart from this, it should be noted by the governments (central and states) and the companies that the expenditure on the account of vaccination is now the investment in the people and economy. So the governments and companies should not shy away. Rather should come forth to offer vaccination opportunities to people. However the central government has already issued directives to government departments regarding this and many companies have already announced vaccination programmes for its employees [6].  

Economic Impact

 It is quite possible that many cities would be brought under the lockdown restrictions to stop the chain however Maharashtra is already contemplating complete lockdown. These developments will stop the economic momentum that had been gained if not reverse. The momentum along with the whole business and economic environment and sentiments will be impacted adversely in the economy has been reflected by the contraction in Index of Industrial Production (IIP) by 3.6%, more than three percent fall in the stock market and depreciating rupee. The conditions in the economy will become even more complex due to the limited capacity of the governments to spend and provide support because of a very high fiscal deficit which is expected to be more than 12% which would be coupled by the increasing inflation and limited scope available to the Reserve Bank of India (RBI) for monetary policy adjustments. However, with the purpose to bring the bond yields and cost borrowings down for the government, RBI has announced the open market purchase of Government of India securities under G-Sec Acquisition Programme (G-SAP 1.0) [7]. G-SAP 1.0 will bring down the volatility in the bond market but also impact the liquidity making the balancing act of RBI even more tougher which is pursuing an accommodative monetary policy stance to support the growth in the Indian economy [8].

India has allowed the second wave of the coronavirus infections when Indian economy is facing one of the worst economic crises in decades. However the economy is on the path of expansion and the economic activities are almost back to pre-pandemic levels. But the private investments in the economy are low; millions of skilled, semi-skilled and unskilled labourers are waiting for jobs as there is a dearth of employment opportunities because of jobless recovery and growth. Banking sector is already facing a mountain of the NPAs and expected to be hit by another storm of bad loans (NPAs) after the Insolvency and Bankruptcy Code (IBC) being reinstated. Inflation in the economy may move upwardly and growth prospects may moderate in coming months [9].  


At present, India is at the crossroad where the nation has to decide and choose either in the favour of human lives or the economy and unfortunately India has to choose the economy over the human lives as the economy cannot afford knee jerk reactions like nationwide lockdown and restriction due to the fear frenzy mass behaviour and have to rely on the medical experiences to save the human lives that it has gained over the last one year to ensure that there is no shock to the economy like previous episode of lockdown.


  • [1] COVID19India.org. (2021a, April 12th). Case Time Series. Retrieved from COVID19India.org: https://api.covid19india.org/csv/latest/case_time_series.csv 
  • [2] COVID19India.org. (2021b, April 12). State Wise Daily. Retrieved from COVID19India: https://api.covid19india.org/csv/latest/state_wise_daily.csv 
  • [3] Mudur, G. S. (2021, April 12). Covid: Second wave threatens to sink healthcare services. Retrieved from The Telegraph: https://www.telegraphindia.com/india/second-wave-threatens-to-sink-healthcare-services-impact-of-covid-begins-to-tell-on-three-worst-affected-states/cid/1812271 
  • [4] Vidya. (2021, April 10). Long queues outside vaccination centres in Mumbai, inoculation delayed due to logistical issues. Retrieved from India Today: https://www.indiatoday.in/cities/mumbai/story/long-queues-outside-vaccination-centres-in-mumbai-inoculation-delayed-due-to-logistical-issues-1789479-2021-04-10  
  • [5] ANI. (2021, April 10). Migrants leave Maharashtra as fear of lockdown looms. Retrieved from Hindustan Times: https://www.hindustantimes.com/india-news/migrants-leave-maharashtra-as-fear-of-lockdown-looms-101618032858980.html 
  • [6] BS. (2021, March 8). From RIL to Capgemini, India Inc gears up to vaccinate employees . Retrieved from Business Standard: https://www.business-standard.com/article/companies/from-ril-to-capgemini-india-inc-gears-up-to-vaccinate-employees-121030501322_1.html
  • [7] RBI. (2021, April 8). RBI announces Open Market Purchase of Government of India Securities under G-sec Acquisition Programme (G-SAP 1.0). Retrieved from RBI: https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51394  
  • [8] Upadhyay, R. K. (2021a, February 13). Growth to Drive the Monetary Policy in Indian Economy . Retrieved from The Deliberation: https://www.deliberation.in/2021/02/growth-to-drive-monetary-policy-in-indian-economy.html  
  • [9] Upadhyay, R. K. (2021b, March 20). Rising Inflation Poses Risk to the Recovery in the Indian Economy. Retrieved from The Deliberation: https://www.deliberation.in/2021/03/rising-inflation-poses-risk-to-recovery-in-the-indian-economy.html  
- Rajeev Kumar Upadhyay

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