Second wave arrests COVID infected economy's recovery in April

Mumbai: COVID infected India's economic activities had seen contracted in the month of April despite setting a continuous three-month recovery trend from the previous economic fall till March.

The lashing of COVID second wave across the country seen most economic activities, including retail, export, business, and industrial activities had been shut to the lockdown restrictions re-imposed in most states to control the spread.

Economic experts are of the opinion that the fallen goods transportations coupled with the rising fuel prices will have a major impact on the economy, which may further push down the economy to a level from where making out of a recovery would be difficult.

At the same time, some economic indicators have been seen being untouched by infection and its nasty impact during these difficult times, giving hope that it could propel economic recovery.

Meanwhile, Barclays, the British brokerage, has cut India's GDP growth estimate for the current fiscal by a sharp .80 per cent to 9.2 per cent, on the basis of halted economic activities, the impact of which is calculated will be much deeper than earlier expected.

The new COVID cases and the virus-induced fatalities amid the slow pace of vaccination have made the market murkier and the experts say the glim of market push only be visible once the market activities come to normalisation.

Barclays pointed out that the economic costs of these unwarily respond to the worsening situation would be much higher than initially estimated.

According to a Bloomberg report, India's dominant service sector had seen its activities waned a second straight month in April due to the COVID restrictions. The IHS Markit India Services PMI declined to 54 from 54.6 - the reading of the PMI above 50 is considered growth.

The Monetary Policy Committee is expected to discuss the rising input costs driven by inflation when it convenes next week. Consumer activities had also dipped in April, registering a double-digit contraction at 17.5% month-on-month in April.

Meanwhile, the industrial sector had increased its production base, jumping 22.4% in March from a year earlier with the support of favourable market demands. But the April index is expected to fall due to the activity curbs induced by the lockdown.