A new wave of Covid-19 infections in India has cast a shadow over the economic recovery as several sectors have been affected by new restrictions which have been announced in view of the situation.
The country has reported more than 58,000 new cases, with a massive peak in Maharashtra, West Bengal, Delhi, Kerala and Tamil Nadu. Daily cases reported on Wednesday were more than 55% higher than the figure reported a day ago.
Daily reported cases are expected to increase rapidly over the next few days as the highly transmissible variant of Omicron continues to spread like wildfire across the country.
Most states in the country have restrictions imposed, including weekend and nighttime curfews, in addition to limiting public gatherings given the alarming increase in cases. Measures taken by states to prevent the increase in cases have already started to impact economic activity, especially high-contact sectors.
WHICH SECTORS HAVE BEEN HARDLY AFFECTED?
Many companies spanning multiple industries have been affected in light of new state restrictions.
Restaurants, retail, leisure, travel and entertainment are already facing losses from new borders.
With caps on public gatherings, catering businesses in many cities have been crippled just after witnessing a rapid recovery during the holiday season last year. Likewise, a multitude of leisure activities such as gymnasiums, spas and other businesses have been urged to operate at a lower capacity.
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The entertainment sector which includes film production multiplexes and food and beverage (F&B) also encountered a hurdle due to the new restrictions. Multiplexes have been closed in many cities, which is also having an impact on catering businesses in multiplexes.
The global entertainment and film industry has also been affected due to the new wave of infections, with some major film projects being put on hold. This is likely to have an impact on the jobs and income of many employees associated with production activities.
Physical retail outlets, including those located in malls and markets, have also been affected as a result of the restrictions. While no estimate has yet been shared by trade bodies, prolonged restrictions could result in losses of several thousand crore, in addition to layoffs.
While many people are still traveling despite the new wave of Covid-19 cases, restrictions imposed by states have started to hurt sectors such as travel, tourism and aviation. If the situation worsens, businesses associated with travel and tourism could face more stringent restrictions.
If the new wave lasts for an extended period or worsens, it will also impact broader sectors such as manufacturing, construction and real estate, among others.
WILL OMICRON HARM THE ECONOMIC RECOVERY?
Experts expect the Covid surge in India due to the Omicron variant to disrupt economic growth for a short time before picking up again. However, that will largely depend on how the country deals with the pandemic.
If the peak is reached within a month, chances are that the new wave will not have a significant impact on economic growth. However, higher infections could lead to more restrictions and lead to a prolonged disruption of major economic activities.
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Medical experts around the world believe the increase in the number of cases, largely due to the Omicron variant, has caused milder infections and hospitalizations remain low. The same trend has been observed in India so far.
But medical experts still urge caution, given India’s massive population. Even if a fraction of the country’s vast population is infected, it could overwhelm the country’s health system, as the elderly and unvaccinated would still require hospitalization.
Considering all the factors, economists are still not entirely sure how the new wave will hurt the Indian and global economy. This is why the International Monetary Fund (IMF) has delayed the publication of its next report on the outlook for the world economy.
A PTI report, citing economists at HDFC Bank, said growth could be affected by up to 0.30% in the March quarter due to restrictions imposed to prevent the rise in Covid infections. 19.
“With states imposing COVID-related restrictions (nighttime curfews on the movement of people, restaurants licensed at 50% capacity, offices operating at 50% capacity in various states), economic activity is likely to decline. ‘be impacted at T4FY22, “they said. .