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Moneycontrol Pro Weekender | Danse macabre

The gravity of the matter can be judged from the fact that India’s daily new infections are more than a third of the world’s and our hospital beds per thousand people are even lower than Bangladesh’s

April 24, 2021 / 01:28 PM IST
Image credit: Suneesh K

Image credit: Suneesh K

Dear Reader,

These are dark times for India. The second wave of the virus has caught us woefully unprepared. People have been running from pillar to post to arrange for hospital beds, life-saving drugs, and oxygen for their friends and relations afflicted with covid-19. Horror stories of overflowing crematoria and burial grounds are doing the rounds. We seem to have learnt precious little from the first wave.

People are demanding answers. How on earth did we bungle our oxygen supplies so badly? Why are so many vaccination centres out of stock? Won’t opening up vaccination to everybody above 18 years of age from May 1, without ensuring adequate supply, lead to chaos? What are the reasons for the alarming rise in infections? What impact will the mini-lockdowns announced by many state governments have on businesses and jobs, especially small businesses? Does the government have any schemes to enable migrant workers tide over these mini-lockdowns?

Many of these questions have no easy answers, not least because there is a complete lack of transparency. As a result, trust has been eroded -- for example, few believe the death rates trotted out by the government.

Nevertheless, we did our best to answer some of them, such as how the oxygen mess happened. Fiscal and monetary support must continue to support the economy and especially the weakest sections. The worry is that it might scare the bond markets and raise interest rates. Exemptions from GST for COVID-related drugs and medical devices are sorely needed. And do we need more stringent lockdowns, especially when India’s daily new infections are more than a third of the world’s and our hospital beds per thousand people are even lower than Bangladesh’s? In fact, businesses are already getting into lockdown mode.


In vaccines we trust. As this FT piece says, "The key to bringing India and Latin America out of the pandemic is the same as it is everywhere else: vaccines." The new liberalised vaccination policy should help. It will boost supply, both by providing a higher price to manufacturers and by allowing the import of vaccines for sale in the open market. But there are also many challenges to be overcome before we can call it a success. And it could be several months before vaccine supplies improve.

But while the COVID-19 danse macabre, the medieval dance of death, is playing out in the cities, the markets are dancing to the tune of a different drummer. Equities rode out the first wave on the support of fiscal and monetary stimulus and hopes of unlocking and vaccines. The second wave is making them glum, albeit not overly so, on the premise that "this too shall pass".

Several companies stand to benefit from the deregulation of the vaccine rollout. But as our economic recovery tracker shows, state lockdowns are starting to take a toll on activity. The prevailing mood is one of uncertainty. For example, the second wave is likely to affect domestic demand for discretionary consumption—Philips Carbon is one such player. A similar question mark hangs over cement companies, particularly as input prices have risen—in particular, we took a deeper look at Deccan Cements. Will road construction continue with its strong performance? The second wave has already swamped the office realty market.

The March quarter corporate results continue to roll in -- Bajaj Consumer Care; Mindtree; ICICI Lombard, Nestle and Bhansali Engineering are some of the results we analysed. HDFC Bank’s financial performance showed that the strong firms have become stronger -- yet another confirmation of the K-shaped recovery.

The silver lining, as we saw after the first wave, is that pent-up demand comes roaring back once the wave recedes. Globally, Moody’s estimates that households have accumulated an excess $5.4 trillion of savings since the pandemic began, which will be available for spending once things go back to normal.

For the weekend, I recommend reading Nobel Prize winning author Albert Camus’s novel, ‘The Plague’ about a plague in a town in Algeria, which has many parallels with the COVID-19 pandemic. The novel shows the varied reactions of the people of the town to the outbreak—some heroic and altruistic, some cowardly and malicious and selfish. As a letter to the British Medical Journal put it, "'The Plague' portrays the battle not only of civil and medical organisations to control an outbreak of disease, but also of the principles of humanism and rationalism against insularity and ignorance – a struggle which is sadly still not wholly unrecognisable to many of us today."

Stay safe,

Manas Chakravarty
Manas Chakravarty
first published: Apr 24, 2021 10:21 am

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