The Reserve Bank of India stated in its report that the impact of second wave of Covid-19 on the economy has not been as severe as that of the first wave. Nevertheless, the movement of people in places like the bus stations, shops, markets, and work is nearly half as compared to the ‘pre-pandemic scenario’. The mobility trends are very much similar to what was witnessed in June 2020.
A CRISIL report released on 17th May reads, “High-frequency indicators of the economy have continued to soften. Mobility indicators, in particular, have fallen to June 2020 levels.”
Reports on the grounds suggests that the rate of Covid-19 infections in India has slowed down. But undoubtedly, the mobility indicators have worsened.
According to Google’s Mobility Report for India, people looking for restaurants, cafes, markets, and other public places are down by more than half, when compared to the scenario in January and February 2020. Moreover, even essential services like the supermarket and pharmacies have seen a significant 23% compared to the baseline value.
RBI in its state of the economy report stated, “The biggest toll of the second wave is in terms of a demand shock — loss of mobility, discretionary spending and employment, besides inventory accumulation — while the aggregate supply is less impacted.”
Its been around 10 days that we’ve seen a dip in cases. Otherwise, in the beginning of May, the daily case rate crossed the 400,000 mark and it only increased as the days passed by.
A government panel set-up under the Science Ministry of the Government of India, predicts that the second wave is going to subside until July. Also, the third wave is anticipated to strike in the coming 6-8 months.
Businesses need policies to deal with the demand slump effectively
Less mobility results in less demand. And clearly, less demand is not good for any business, it’s only going to increase the burden lockdowns have manifested. According to a CRISIL report, the non-alcoholic beverage industry, which includes huge companies like Pepsi and Coca-Cola, is not expected to return to ‘normal. By normal we mean the ‘pre-pandemic levels.
Nitish Jain, the Director of CRISIL ratings said, “Beverage sales volumes will be adversely impacted in the peak season once again due to localized lockdowns and restrictions on movement to contain the second wave of the pandemic,”
Last year also, localized lockdowns and restrictions created difficulty for the beverage sales, that touches peak during the lockdown season. CRISIL claims that this year also, same cycle is going to repeat.
Praveen Khandelwal, secretary general of the CAIT, said, “There are about 15 lakh traders in Delhi, who are providing employment to more than 35 lakh people. As per Confederation of All India Traders (CAIT), Delhi has lost a business of about ₹30,000 crore in the last 45 days,”
Although the GDP outlook for the financial year 2021-22 has been pinned above 10%, by most of the local and international organizations and agencies. But after the horrific impact of the second wave, businesses expect it to be below 9%. Therefore, among the business owners, there is a strong hope that RBI will step in with yet another moratorium, in order to deal with the slump effectively.