Amid the second wave of Covid-19 pandemic spreading like wildfire, the evidence of a slowing economy are gradually showing up. Only recently, economists predicted 12-13% GDP growth in 2021-22, but now with the pandemic spreading, such a level of y-o-y growth – even on the back of low base effect – seems far off. In this situation, it seems the only way to get our economic activity back on track is to speeding up the vaccination drive.
According to a latest report, India’s high frequency economic indicators have started to show a softening trend. Retail mobility declined 8.2 percentage points (pp) on average in the week ending May 2, while workplace mobility slowed 7.1 pp. GST e-way bill collection (volume) fell 6.9 per cent on-week for week ending April 25. These trends are not at all encouraging. Additionally, as the second wave is closing in on rural India, this is a real concern also from an economic point of view.
We can find a lot more such indicators around us. Total bank loans contracted by around Rs 63,000 crore between March 26 and April 9; rate of unemployment increased from 6.6% as of the end of March to 7.8% as of April 29; traffic congestion index for major cities are dwindling; people are confined to their homes and spending less; auto dealers are shutting their shops in many parts of the country; and so on. These trends are unlikely to reverse until the pandemic situation improves.