Bracing for new disruptions

Businesses are more resilient after a year of the pandemic, but they will be severely tested again as India battles the second wave of covid-19.

When India went into one of the harshest lockdowns in the world on March 25 last year, the impact on businesses was so grave that the economy went into recession, for the first time in 40 years. Now, as the country battles a second wave of Covid-19, with active cases rising sharply by the day (552,566 cases as on March 31), there is heightened fear that whatever economic recovery has been achieved in the past six months could be wiped out. Reserve Bank of India (RBI) governor Shaktikanta Das, on March 25, expressed confidence that the second wave of Covid will not impede economic recovery, and that the economy would grow at the 11 per cent the central bank forecast for 2021-22. But industry experts feel the economy’s resilience will be tested by the severity of the Covid wave and be critically determined by the pace at which India vaccinates its population, particularly those in the 20-60 age group, who constitute most of the workforce. No lockdowns have been announced yet and the Centre has left it to the states to decide the extent of restrictions to be imposed. Punjab, Maharashtra and Gujarat are in the midst of their worst outbreaks. Maharashtra and Gujarat together account for 22 per cent of India’s GDP. The rising cases and possibility of more restrictions in the two states pose a big threat to businesses and the economy at large.