Moneycontrol Pro Panorama | Amid lockdown talk, India is counting its economic losses

Some residents have barricaded alleyways using carts, bicycles and sticks. Signs warn outsiders to keep away. (Reuters)

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“The bill is rising.”

That’s how investment bank Barclays’s economists described the growing cost of a pandemic. Although it is nowhere close to the last year’s – when gross domestic product shrank in the June quarter – losses to economic activity continue.

In Barclay’s base case, the lockdown (s) will continue till the end of June and will shave one percentage point from India’s real GDP growth for financial year 2021-22. It expects the economy to grow at 10 percent.

It is only the latest to do so. Earlier, State Bank of India cut its real GDP growth forecast to 10.4 percent from 11 percent. India Ratings and Research too had cut it to 10.1 percent from 10.4 percent.

This pessimism is not unfounded. The state lockdowns are starting to tell on activity as our economic recovery tracker shows. Almost all weekly indicators are flashing red. Unemployment has risen, consumer sentiment down in the dumps. Preliminary estimates of fuel sales in April show a decline as do e-way bill numbers. You can read our update here.

But while these numbers look bad, the COVID- situation is far worse. Daily cases continue to register at above 3,50,000 and deaths above 3,000.

The situation has even put industry in a funk. Industry lobbies such as CII and FICCI are asking for a national lockdown. Some big companies, especially in the auto sector, are voluntarily shutting shop.

In effect, industry seems to be willing to swallow the bitter pill of a lockdown for the short term in the hope of bouncing back over the medium run. What do they think a lockdown can achieve? We try to answer here.

At the end of the day, even lockdowns will be effective when the time is used to build healthcare infrastructure and ramp up vaccination production.

In recent days, there have been lots of stories, claims and counter claims about the vaccination drive. From the facts available so far, two stand out.

Three percent of the adult population (now that everyone over 18 years is eligible) have been fully vaccinated so far, i.e. taken both doses.

Going by the Centre’s orders from Bharat Biotech and Serum Institute, and a press release from the latter, total vaccination doses available to the Union, states and the private sector will be around 450 million by the end of July. That is barely 25 percent of the adult population (assuming two doses). This is not counting wastage, and imports of Sputnik V and others that may be in the pipeline.

Stay safe and check out these reports from our independent equity research team:

Kotak Bank – One of the best core portfolio stocks despite all the noise

Atul: Proxy for global recovery

Trent: Near-term headwind an opportunity for long-term investors

Strengthening balance sheet makes Dalmia Bharat more appealing

What else are we reading?

Indian Hotels: Good housekeeping to become future fit

Laurus Labs’ $1 billion sales target needs a bit of luck on execution

What Indian investors can take away from the Berkshire Hathaway annual meet

A reckoning for Spacs: Will regulators deflate the boom? (Republished from the FT)

Our chartists’ technical calls for the day (Please note these calls are published before the markets open on trading days): Tata Coffee, Thyrocare and ICICI Prudential

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Ravi Krishnan
Moneycontrol Pro