According to a report in Money Control, Curbs in various forms such as reducing the capacity of market/market complexes and night/weekend curfews to check human mobility/contact have already started in several states, which are impacting economic activities, India Ratings and Research said in a note.
The Omicron variant spread will impact the January-March quarter GDP by 0.40 percent and shave off 0.10 percent from the FY22 growth, as many states resort to restrictions to limit infections, a domestic rating agency said on Thursday.
Curbs in various forms such as reducing the capacity of market/market complexes and night/weekend curfews to check human mobility/contact have already started in several states, which are impacting economic activities, the report said.
Fourth Quarter GDP
The surge in cases seen over the last fortnight will have an adverse impact on the fourth-quarter GDP and the growth will come at 5.7 percent during the quarter, which is 0.40 percent lower than the earlier estimate of 6.1 percent.
For the entire FY22, the GDP is expected to clock a growth rate of 9.3 percent, 0.10 percent lower than what was estimated earlier.
The revision in estimates comes amid a massive surge in COVID infections across the country, especially in the metro.
A majority of the new cases are suspected to be that of the Omicron variant of the coronavirus, which is suspected to be spreading fast and also evades prior vaccinations.
Indications so far suggest that the infections are milder and mostly not life-threatening, the rating agency said, adding that the curbs imposed by local governments will be less disruptive than those during the first two waves of COVID.
COVID-19 Levels
Both government and businesses are more equipped to deal with the situation and be more resilient, it said, expecting the impact of COVID 3.0 to be lower than COVID 1.0 and 2.0.
The economy will bounce back pretty quickly once the third wave subsides, the report said.
Policy support – both monetary and fiscal – would be critical till the threat of pandemic continues and the economy reaches the stage of a sustained growth trajectory, it added.
Despite the ongoing recovery, select high-frequency indicators, such as the Index of Industrial Production, are showing that the industrial output levels are still lower than pre-COVID-19 levels, it stressed.
The rating agency said it expects the Reserve Bank of India to continue with its accommodative policy stance with no change in the policy rate in the foreseeable future and the Centre will not be in a hurry to get back to the fiscal consolidation path. (Money Control)
