India Ratings and Research (Ind-Ra) believes the second wave of COVID-19 infections will be less disruptive than the first wave, despite the case load per day reaching more than 3.0x of the peak level attained during the first wave.
This is because the administrative response is likely to be confined to the regional/local lockdowns and containment zones. Moreover, unlike the first wave, the administrative response is not abrupt, and is unfolding gradually in a graded manner. Also, households businesses and other economic agents are better prepared and there is a significant amount of learning by doing, which can help them withstand and navigate through the second wave of COVID-19 crisis. Lastly, the roll-out of COVID-19 vaccine since 16 January 2021 would enhance safety and reduce the fear element among the vaccinated economic agents. Till 21 April 2021, 132.33 million vaccine doses have been administered.
Since 1 May 2021, all people aged 18 years and above are entitled for vaccination. According to Ind-Ra's estimate, this would require 1,768 million vaccine doses (including 5% wastage), which will cost the union government 0.12% of GDP and state governments 0.24% of GDP. Both vaccination production and the pace of vaccination are key in controlling the pandemic as well as for growth recovery.
"Ind-Ra has, therefore, revised its GDP growth forecast for FY22 to 10.1% from earlier forecasted 10.4%. The revision assumes the second wave of COVID-19 to start subsiding mid-May 2021 onwards. The demand-side component of GDP namely private final consumption expenditure, government final consumption expenditure and gross fixed capital formation are now expected to grow at 11.8%, 11.0% and 9.2%, respectively, in FY22, as against our earlier forecast of 11.2%, 11.3% and 9.4%, respectively," the rating agency said.