The economic impact of the second wave of the coronavirus pandemic may intensify in the coming weeks as more states may be compelled to impose stricter restrictions. Business and commercial activity in India is slowing down rapidly on account of multiple local lockdowns, and things are likely to get worse before getting better. The economy currently is around the level of October 2020, Noumra said in a report.
Economic normalization in the country has already been hit by the surge in cases, with the Nomura India Business Resumption Index falling 16 percentage points below pre-pandemic normal as of Apr 18. The index was at 83.8 for the week ending Apr 18, down from 88.4 the previous week. "While lockdown stringency has not increased since last week, this may be temporary, as states could impose stricter restrictions in response to the burdening of hospital infrastructure," it said.
India has reported over 3 million cases since the beginning of the month, forcing many key states like Maharashtra to announce a complete lockdown to curb the virus. Delhi on Monday also imposed a one-week-long curfew in a bid to curb spiraling cases amid a shortage of health infrastructure. While Nomura sees sequential moderation in economic activity in April, it said, the impact of the second wave on the economy will be benign compared to the first wave, which saw about a two-month-long nationwide lockdown.
Nomura noted that while mobility has been hit due to restrictions, power demand and labour participation rate have remained largely unaffected. According to the report, power demand weakened by 3 percent week-on-week for the week ending Apr 18 but remained 12 percent higher than its two-year ago level
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