While hinting at further policy support, RBI reports state that daily wagers, frontline workers, small businesses, and start-ups are among the worst hit. On the other hand, high-end manufacturing and IT services have survived in the game. The report also hinted at further policy support.
It also mentioned that besides doctors, healthcare workers, law keepers, and municipal personnel, the most vulnerable are blue collar workers as they’ve to risk exposure for a living.
“They will warrant priority in policy interventions,” adding to this, the report said, “It is in this direction that the Reserve Bank, re-armed and re-loaded, has stepped out. This is the beginning. There is more work to be done.”
As compared to the first wave the impact of the second wave has been limited to the economy. Multiple reasons for that: localized nature of lockdowns, better adaption of people in working from home, online delivery models, ecommerce, and in general better adaption to different digital avenues.
The central bank took multitude of measures early this month, ensuring liquidity support to the most vulnerable segments of society through banks and other financial institutions.
According to the report, the second wave impacted largely in terms of demand shock on account of loss of mobility and earnings. Notably, aggregate supply is less impacted.
The effect of the new infections looks like a U shape, said the report. Each shoulder of U represents the sectors that are enduring this havoc. One of end we have agriculture and IT on the other.
The slopes of the U: one side represents organized and automated manufacturing. Other side shows the services that are easily delivered and doesn’t need producers and consumers for movement. All of these activities continue to function under proper pandemic protocols. Furthermore, the most vulnerable sections lie in the well of the U-shaped curve.
“The road ahead is fraught with danger, but India’s destiny lies not in the second wave, but in life beyond it,” RBI mentioned in the report.