NEW DELHI: The second wave of coronavirus infections poses credit-negative threat to India’s economic recovery, according to Moody’s Investors Service. Referring to India recording its highest daily surge on April 11 since the start of the pandemic, pushing its active case load further past 10 lakh,
Moody’s observed that the announced countermeasures to combat the second wave some of which are due to remain in place at least until the end of April risk weakening the economic recovery. However, the targeted nature of containment measures and rapid progress on vaccinating the population will mitigate the credit-negative impact, it said.
The global ratings agency has projected Indian economy to grow 12 per cent in 2021. For fiscal year 2021-22, it had revised higher the growth estimate for India to 13.7 per cent in February. Given the focus on micro-containment zones to deal with the current wave of infections, as opposed to a nationwide lockdown, Moody’s expects that the impact on economic activitym, however, will be less severe than that what was seen in 2020.
“Retail and recreation activity across India had dropped by 25 per cent as of April 7 compared with February 24, according to Google mobility data. This was mirrored in the Reserve Bank of India’s March consumer confidence survey, which showed a deterioration in perceptions of the economic situation and expectations of decreased spending on non-essential items,” it noted.
‘Vaccination is the key’
Moody’s said vaccination will be a key element in controlling the second Covid-19 wave, but a shortage of vaccines and the country’s population of nearly 1.4 billion, which includes many people living in rural, could slow the progress of vaccine rollout.