COVID has been causing uncertainty in the markets since its onset in 2020. The second wave was particularly alarming in which there was a steep rise in cases to a point where the per day case count went over 4,00,000. Furthermore, there was a severe deficit of oxygen supply, hospital beds and medicines. It gave rise to a feeling that the economy which seemed to be recovering in Q4 FY21 with a GDP growth of 1.6% may falter again.
However, as per the Chief Economic Advisor, Mr. K V Subramanian, the second wave of COVID 19 is not likely to have a severe overall impact on the Indian economy. The primary reason being the localized state lockdowns that were implemented and helped to control the rising number of cases.
Going forward, it is expected that the economic recovery should pick up pace aided by the following factors:
- Gradual unlock down being planned by different state governments as the number of cases is declining.
- The expectation of a new stimulus package by the Central Govt to help revive sectors that were worst affected by COVID such as hospitality, tourism, aviation and SME companies.
- Predictions of the monsoon being on time and expectations of good levels of rain.
- Foodgrain production is expected to reach record levels following a good monsoon and will also help fuel GDP growth.