Economic shocks from 2nd Covid wave will be less severe

Moody’s Investors Service estimates that the overall hit to India’s economy to be softer than during the first wave last year

However, the pace of recovery will be determined by (1) access to and delivery of vaccines, and (2) the strength of the recovery in private consumption, which could be hampered by the deterioration of balance sheets of low and middle-income households from job, income and wealth losses.

The second wave of COVID-19 and the subsequent lockdowns came as India had been on a steady path toward economic recovery and double-digit growth. The virus resurgence adds uncertainty to India’s growth forecast for 2021; however, it is likely that the economic damage will remain restricted to the April-June quarter. We currently expect India’s real GDP to grow at 9.6 per cent in 2021 and 7.0 per cent in 2022, it said.

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