How India's recovery is shaping up as states relax restrictions?

The Union Finance Ministry in its latest Monthly Economic Review said that the third wave of the pandemic reached the peak in just 31 days, thereby limiting the damage to the economy. The second wave lasted about 79 days and the first 220 days. Of the three, the third wave has also been the least fatal. 

Demand for energy also remained resilient as power consumption in January this year grew 2.1% over December, reflecting the weak impact of Omicron on economic activity.

As the danger of the fast-spreading Omicron variant subsides, major hospitals across India are reporting almost empty Covid wards.

Daily Covid-19 cases have trickled down from a high of 3.47 lakh on January 20 t0 25,920 on February 18, while daily recoveries continue to outnumber new cases. 78% of the adult population is fully vaccinated now.

With that, and following the Centre’s fresh order, states have started to remove the additional restrictions imposed in the wake of the third wave. 

While Haryana lifted all such restrictions last week several other states, including Maharashtra, Delhi, Gujarat, and Kerala, are expected to hold review meetings soon to take a call on the matter.

States are going for a gradual easing of restrictions.

Gujarat relaxed the night curfew timings by three hours last week. Delhi, which still continues with night curfew and curtailed business hours for shops, is likely to revisit its stance this week. It has already lifted the weekend curfew. The odd-even system of opening non-essential shops has also been done away with. Multiplexes have also been opened with half the strength.

In Tamil Nadu, nursery and play schools have been opened, putting the entire education sector on track. The state government also allowed 100% occupancy in almost all previously regulated places, including theatres, hotels, malls, gyms, lodges, shops, and amusement parks. The state had already lifted night curfew through a notification on January 27.

Kerala, still with a positivity rate of 15.75%, is going slow, withdrawing restrictions in stages.

While states are doing their part to aid in the economic recovery, the Centre has considerably relaxed the restrictions on international travellers last Thursday. Fully vaccinated passengers from 82 countries will not be required to take a pre-departure RT-PCR test. 

International travellers will not have to mandatorily home quarantine for seven days or get an RT-PCR test done on the eighth day. 

The government has also removed the demarcation of countries ‘at-risk’ and other countries. With this, the requirement of giving samples at airports and waiting till the result is obtained from countries ‘at-risk’ is done away with. The ban on regular international flights, which has been in place in India since March 23, 2020, was extended to February 28th. 

However, special passenger flights have been operating between India and approximately 40 countries since July 2020 under air bubble arrangements formed with them.

The government is reportedly planning to lift the suspension on scheduled international flights from March. Meanwhile India’s domestic air passenger traffic fell sharply by 43% in January to 64.1 lakh passengers from 1.1 crore passengers in December. 

Air passenger traffic was enjoying a rebound after the second wave but was dented by the third wave in January. Almost 90 lakh passengers took to the skies in October 70.7 lakh in September. The recovery in aviation has been bleak so far with the industry struggling to reach pre-COVID levels. However, reducing travel constraints and infections is expected to help in air travel demand.

Meanwhile, the government and the RBI have sounded optimistic notes about the economic recovery. The Finance Ministry in its Monthly Economic Review (MER) report last month said that overall economic activity has remained resilient amid the third wave.

Citing high-frequency indicators, the report said that India’s economy is well on its way to growing at above 9 per cent as projected in the country's advance estimates for the current year.

It also said that agriculture continues to see a constant increase in net sown area and crop diversification will strengthen food buffers while benefiting farmers through generous volumes of procurement at remunerative minimum support prices and income transfers.

The report claimed that the Budget 2022-23 has strengthened the direction set for India’s economy by the previous year’s budget. The ministry is hopeful that employment generation by the government’s capex push will lead to an increase in consumption levels.

Easing of restrictions and policy support from the government will soon lift the economy to the pre-pandemic level, given that people don’t let their guard down.

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