The Coronavirus resurgence in India has led many rating agencies to revisit their stance on India’s economic growth, one such organization is the Oxford Economics. Oxford Economics in its latest reports has raised concerns that India’s economy’s recovery could be derailed given a huge surge in its rise.
Recently in February, Global forecasting firm, Oxford Economics had revised India’s economic growth projection for 2021. The projection was upgraded to 10.2 percent from the earlier 8.8 percent.
The reason cited was receding COVID-19 risks, as India’s COVID-19 positivity rate had plummeted immensely and the shift in the monetary policy outlook had given a positive outlook for a V shaped recovery. But a recent spike in cases, according to Oxford Economics reports, can now derail the Indian economy’s growth.
As it is known, that state governments are reluctant to reintroduce strict lockdowns, given its economic crippling nature, the report by the thinktank states that though the economic impact will be much less severe than the second quarter of the previous fiscal, the growth momentum of the current fiscal’s first quarter could be slower than predicted.
The Think Tank report additionally states that the high frequency data points towards a slowdown in growth momentum in the first quarter.
However at the same time, these indicators are yet to show a sharp deceleration in response to the rapid increase in Covid case counts.
In yet another observation, the report states that compared to the international experience, the vaccination rate, at the current moment, is far below the level required to contain the virus itself. Recently, there have been various reports stating low vaccine stock in various states like Maharashtra and Tamil nadu, leading them to shut down their vaccine centers.
This has led to speculations about depleting vaccine stock and slow vaccine drive across the nation. Additionally, there have been reports stating that the second wave is likely to be more severe which consequently has led to low market confidence.
The think tank has additionally observed that if the health situation worsens substantially and if consequently tighter restrictions are to be reimposed, then this would certainly threaten their baseline forecast for the first half of the current year.