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GlobalData revises down India’s economic growth forecast for 2021 to 9.67% amid COVID-19 second wave

With economic activities getting affected due to the second wave of COVID-19 pandemic related curbs across states, GlobalData, a leading data and analytics company, has revised down its 2021 GDP growth rate forecast for India from

With economic activities getting affected due to the second wave of COVID-19 pandemic related curbs across states, GlobalData, a leading data and analytics company, has revised down its 2021 GDP growth rate forecast for India from 9.71% on 8 February 2021 to 9.67% on 26 April 2021.

Gargi Rao, Economic Analyst at GlobalData, comments: “Sharp spike in COVID-19 cases, shortage of vaccine raw material resulting in the delay in vaccination and lack of convincing government policies, both at the center and state levels, are escalating health burden and subsequently hampering India’s economic recovery.” 

As of 27 April 2021, there were a total of 17,636,186 confirmed cases with 82.5% recovery rate and 1.1% fatality rate. More than 300,000 cases are being reported across the country daily over last week, with hospitals getting overcrowded. According to the Ministry of Health, Maharashtra, Delhi, Uttar Pradesh and Chhattisgarh are the top states to witness high resurgence in COVID-19 cases. These states represented around 50% of the total COVID-19 deaths as of 27 April.

Ms Rao explains: “Due to the severe second wave of COVID-19, India’s healthcare infrastructure is witnessing immense strain. The new containment zones and partial lockdowns across several states, including Maharashtra and Delhi, have resulted in the halt of business activities along with mounting ambiguity in consumer confidence and investors due to the ensuing economic uncertainty.”

Poor health infrastructure along with non-availability of medicines, faltering vaccine administration and oxygen supply shortages resulted in an increase in fatality rate. The economic recovery of India is expected to be delayed amid the uncontrollable surge in COVID-19 cases. The 2022 economic growth forecast has also been revised down to 6.95% on 26 April from its earlier projection of 8.11% on 8 February.

Ms Rao continues: “The Purchasing Managers’ Index (PMI) for manufacturing and services, which increased to 57.5 and 55.3, respectively, in February 2021 amid the easing of restrictions and vaccine rollouts, started slipping since then and stood at 55.4 and 54.6, respectively, in March 2021. Production, procurement of inputs and new orders expanded at softer rates in March due to the rise in cases and re-instatement of lockdowns.”

Vaccine deployment remains uneven throughout the states in India. According to GlobalData, only 10.5% of the population has been fully vaccinated, against a requirement of 70% for achieving herd immunity.

Ms Rao concludes: “The need of the hour is to maintain uninterrupted supply of vaccines for the proposed vaccination drive along with the efficient procurement and supply of oxygen cylinders throughout the country. The government needs to step up through prudent fiscal policies to strengthen the health infrastructure and provide greater autonomy to states to help combat the pandemic.

“Even though, the influx of international aid will fill the acute gap in the supplies of oxygen and medical equipment will help soften the current health sector crisis, the health infrastructure needs to be revamped with better health and wellness centers, medical equipment, and stock of medicines at district, state and center levels to increase capacity and strengthen the healthcare system.”

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