On Sunday, the number of daily infections in India remained below 100,000 for the seventh straight day. That is four times less than a month ago. As a result, after weeks of detention, Delhi and Bombay have begun lifting many restrictions. And as of Monday, restaurants in the capital will be able to receive customers again. Because we have to get the economy back on track quickly.
The unemployment rate in India fell from 7.2% in April to 11.9% in May, according to the Center for Monitoring the Indian Economy. More than 25 million jobs have been lost since January, 22.7 million of them in the last two months alone, corresponding to this brutal second wave. When deconfining, only two thirds should be found.
“The Indians are therefore cutting their spending, which leads to a quarterly drop in demand,” explains Himanshu, professor at Jawaharlal Nehru University in New Delhi. Sales of consumer goods such as groceries, ready-to-wear and beauty products fell 49% in April, according to the Retail Association of India. May data is yet to be released, but the decline is expected to continue. Much of the country remains imprisoned and the epidemic continues its disastrous course in rural areas, home to two-thirds of the population.
“This second wave was more devastating in human terms. And economically, households lost income when they had to fall back on their savings during last year’s lockdown, ”warns Himanshu.
To contain the first wave, India imposed one of the strictest bans in the world. Growth collapsed by almost 24% in the first quarter (April to June). An unprecedented situation that has resulted in a major setback in development. According to a recent announcement by the French Institute for International Relations, 75 million people have fallen into poverty.
Still, India’s central bank decided in late May that the economic impact of the second wave appeared to be more limited compared to the first wave so far, particularly due to the implementation of more local containments.
“A serious setback on the way to recovery”
But the economic hardship is deep. This is evidenced by the increase in mortgage loan defaults, particularly jewelry that has been mortgaged by Indians. Manappuram Finance, one of India’s largest pawn shops, auctioned gold worth $ 55 million between January and February. She’d sold it for just over a million dollars in the previous nine months.
“The effects of the second wave represent a major setback on the road to economic recovery in 2021,” warns Rajiv Biswas, an economist at IHS Markit. For the fiscal year ended March 31, India’s growth posted a historic decline of 7.3%, and before that recent surge, IHS Markit predicts a recovery of about 10% for the current year. “The growth forecast for India has been lowered significantly to 7.7% for the 2021-2022 financial year,” says Rajiv Biswas.
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