oppn parties The Second Wave Poses More Problems For The Indian Economy

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  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
  • India has moved to the 40th spot in the innovation index, up 6 spots from last year
  • DGGI has alleged that top insurance companies, banks and NBFCs has committed a fraud of Rs 800cr by claiming input tax credit without underlying supplies
  • The Centre will borrow Rs 10000cr less than planned earlier due to good revenue collections
  • At $23.9bn, India's current account deficit widened to 2.8% in Q1, the worst in four years
  • Stocks continue to flounder on Thursday: Sensex sheds 188 points to 56409 and Nifty 40 points to 16818
  • The 36th National Games were declared open on Thusrday by PM Modi in front of a record crowd in Motera near Ahmedabad
  • Jasprit Bumrah most likely to miss T20 World Cup due to recurrence of back injury
  • PFI's political wing, the SDPI is on EC radar and action will follow soon if discrepancies are detected
  • Ashok Gehlot to meet Sonia Gandhi today, says all issues will be sorted out soon
  • Referring to the PFI ban, most Muslim organizations ask the government to take similar action against right wings organizations like the RSS, Bajrang Dal, VHP and the like
In a landmark order, Supreme Court rules that all women, married or unmarried, are entitled to safe and legal abortion up to 24 weeks of pregnancy as per the MTP Act
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The Second Wave Poses More Problems For The Indian Economy

By Ashwini Agarwal
First publised on 2021-04-16 11:34:20

With mini and weekend lockdowns returning, the Indian economy is in for major shocks. Hiring was picking up but companies are bound to go slow once again. After the stellar performance in the period September 2020 to February 2021, many analysts had revised the growth estimates favourably. These will also be revised downwards now.

Although business activity is slowing down, it continues to expand. At 54.6 in March, the IHS Markit Services Business Activity Index, though lower than the 55.3 achieved in February, showed consecutive expansion for 6 months. But other indicators show a slowdown. The Nomura India Business Resumption Index (NIBRI) fell to 90.4 in the week ending April 11, registering its biggest week-on-week fall. The Index of Industrial Production (IIP) fell consecutively in January and February and the fall in February was steeper.

With a period of uncertainty looming large and with experts predicting that the peak of the second wave will be reached only in June, there is a huge chance that there will be severe disruptions in economic activities. With migrant workers deciding to beat the lockdown and reach home before it is imposed (if it is imposed, that is, but who will explain that to them as they had suffered so much the last time), labour costs will increase. WPI is already showing signs of entering double digits and retail inflation is also not far behind. If that happens, interest rates will firm up and growth will slow down heavily.

In this scenario, the government will have to support the economy by making the investments it had promised in the budget. It cannot continue to defer them. GST collections have touched record highs so the government is not as squeezed for funds as it was during the first wave. Now it must fast track divestment to arrange the money needed to fund these schemes. Once large funds start flowing in infrastructure projects, maybe the slowdown will be averted. Otherwise, the second wave will have a much bigger negative impact on the economy.