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The virus threatens India’s economic recovery again. But don’t panic yet -Sonal Varma and Aurodeep Nandi

-The Indian Express

The spectre of lockdowns is looming large once more, and while there are bright spots, there are also risks and uncertainties to watch out for.

As India’s economy embarks on a new financial year, a dark cloud is on the horizon: The second wave. Every day brings further reconfirmation that the second wave is no longer a Maharashtra-centric phenomenon. With the daily run-rate of cases surpassing the first-wave peak, it’s no longer just a wave, but a potential tsunami. Yet, there is a silver lining — the number of daily deaths is currently around half of what it was during the first wave peak, offering some relief to the health infrastructure, and consequently reducing the urgency of states to rush into lockdowns. However, as cases rise, this relief may prove short-lived.

The second COVID-19 wave comes at a time when India’s economy has made a resilient comeback. But with the spectre of lockdowns again looming large, how much does the second wave threaten this recovery?

There are a few reasons why we aren’t raising a panic at this point. First, the lockdowns are far more benign than they were during the first wave. While select contact-based services and transportation are likely to be hit, they remain operational at lower capacity levels. The rest of the economy — agriculture, industry and even services such as construction, communication, trade — should remain largely unaffected. Our estimates suggest that the sectors “at-risk” account for less than 6 per cent of the economy. Second, firms and consumers have rapidly adjusted to the new normal and the relationship between (lower) mobility and (weak) economic activity has been weakening over time.

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