The Indian financial market has quickly recovered from the downturn caused by the country’s devastating second wave of coronavirus, and the stock price is close to historical highs.
But outside of the city, even if public health officials warn that the third wave is coming, rural families are still re-stitching their lives.
“You may see Title number Come back, but that doesn’t mean everything is idiot,” said Dharmakirti Joshi, chief economist of CRISIL, a credit rating agency.
Last month, drone footage exposed the shocking labor costs caused by the new coronavirus wave in India. The footage showed hundreds of shallow graves along the sacred Ganges River.
“The population is Psychological trauma,” said Jahangir Aziz, head of emerging market economics at JPMorgan Chase. “All investment plans — all durable consumption plans — will be postponed. “
Before the Delta variant appeared, Indian scientists first discovered this variant in rural Maharashtra in February. After shrinking by 7.3% last year, the Indian economy is expected to achieve double-digit growth.
But the second wave dropped the Reserve Bank of India’s consumer confidence index from 84 before the pandemic to a historical low of 48.5. Since April 1, the virus is known to have infected approximately 18 million people and claimed at least 232,000 lives.Analysts doubt Real toll Much higher.
The Reserve Bank of India recently lowered its GDP growth forecast for this year from 10.5% to 9.5%. JPMorgan Chase predicts that India will grow by only 9%, and Aziz said that this will make the economy about 10% smaller than the level predicted before the pandemic.
“Anyone who is connected to the global market will do well,” he said. “But Indian consumption, Indian investment and Indian small businesses will suffer unimaginable damage. In addition to necessities, people will be very, Very cautious About the purchase. “
Last year, under strict blockade measures, 100 million jobs evaporated overnight, causing a large number of people to migrate to the countryside, and workers in India were hit hard. According to a study by Azim Premji University, by the end of 2020, it is estimated that 15 million former urban workers are still unemployed, while those who have jobs earn less than before.
Strong performance agricultureDue to abundant monsoon rains, it increased by 3.6% last year, and the government’s huge expenditure on rural work welfare programs helped ease the blow.
But in a country where patients pay nearly 70% of their medical expenses, the surge of the new coronavirus has forced millions of families to use savings, sell assets or borrow money to treat sick relatives.
Such shocks may depress consumer confidence within a few months, especially middle-class and working-class families. “Health expenditure Is eroding family balance sheets, especially poor families,” Josh said.
Shobhnath Patel, a 38-year-old karate coach in rural Uttar Pradesh, said that since the pandemic forced him to suspend classes, his two nephews lost their jobs in the auto industry, and his brother’s house painting business closed down, he ‘S family has been struggling.
When his eldest brother contracted the new crown virus in April, the whole family spent 80,000 rupees (US$1,080) of their savings to go to the nearby city of Varanasi for ambulances, doctor fees, oxygen bottles, medicines and hospital bills. Unsuccessful to save him.
Other families in Patwa in Patel village suffered similar setbacks, as the virus hit at least one member of each family and claimed the lives of about 12 people.
“The economic situation of most people is at a very delicate moment,” Patel told the Financial Times. “A lot of people spend a lot of money on treating their families. Marriage, house building plans or any of these major events must be put on hold. Every family has suffered.”
Being caught off guard by the second wave, many Indians seem to be dissatisfied with the inevitability of the third wave, which will also put pressure on demand. “There is huge uncertainty,” Josh said. “No one can predict the severity of another wave.”
So far, India has received 315 million doses of vaccine, or about 23 doses per 100 people, which is far below the threshold for a safe economic reopening, but the rate of vaccination is increasing. However, as pointed out by JP Morgan’s Aziz, “any increase in liquidity is likely to reignite another wave.”
Pessimism is not widespread. Saurabh Mukherjea, founder of Marcellus Investment Managers, said that with the relaxation of restrictions, “commercial activity is rapidly recovering” and concerns about public transportation, coupled with cheap financing, are driving demand for cars and motorcycles. “No one wants to take public transportation,” he said.
But he acknowledged that the sustainability of the rebound in consumer demand depends on the trajectory of the virus. “If we fall into the third wave again, we will fall into stagnation again.”