Western nations to rush Covid aid to frantic India
• IMF’s upgrade to 12.5%, the highest rate among major economies, is in doubt as coronavirus infections surge
The US, UK and Germany will be airlifting emergency aid after India set a new global record for the most Covid-19 infections in a day at almost 350,000.
Hospitals in the capital, New Delhi, and countrywide are turning away patients after running out of oxygen and beds. The number of cases rose by 349,691 on Sunday, the fourth consecutive day of record peaks.
The US said it was deeply concerned and would rapidly send aid. US secretary of state Antony Blinken said on Twitter: “We are working closely with our partners in the Indian government and we will rapidly deploy additional support to the people of India.”
German
Merkel expressed Chancellor“her sympathy Angela on the terrible suffering” that the pandemic has brought, said her spokesperson, Steffen Seibert. “Germany stands in solidarity with India and is urgently preparing a mission of support.”
Britain said on Sunday it was sending more than 600 medical devices, including oxygen concentrators and ventilators.
Prime Minister Narendra Modi has urged all citizens to be vaccinated and to exercise caution, saying the “storm” of infections had shaken India.
His government has faced criticism that it let its guard down earlier this year, allowed big religious and political gatherings to take place when India’s cases fell to below 10,000 a day and did not plan for boosted health-care systems.
Now hospitals and doctors have put out urgent notices, saying they are unable to cope with the rush of patients.
Outside a Sikh temple in Ghaziabad, a city on the outskirts of Delhi, the street resembled the emergency ward of a hospital but crammed with cars carrying patients gasping for breath as they were hooked up to hand-held oxygen tanks.
Elsewhere, people were arranging stretchers and oxygen cylinders outside hospitals as they desperately pleaded for authorities to take patients in, Reuters photographers said.
“Every day, it is the same situation — we are left with two hours of oxygen. We only get assurances from the authorities,” one doctor said on television.
Delhi’s chief minister, Arvind Kejriwal, extended by a week a lockdown in the capital that had been due to end on Monday. Covid-19 is killing one person every four minutes in the city.
Yet for now, Modi is shunning a nationwide lockdown and is encouraging states to keep their economies open.
Just two weeks ago, the International Monetary Fund upgraded India’s economic growth forecast to 12.5% — the quickest rate among major economies. Now that bullish view is looking in doubt.
With the streets of Delhi mostly empty and the markets nearly deserted, economists are signalling risks to their forecasts but not tearing them up just yet.
Epidemiologists and virologists say more infectious variants of the virus, including an Indian one known as B.1.6.1.7, have fuelled the ferocious surge.
Doctors at New Delhi’s All India Institute of Medical Sciences have found that one patient is now infecting up to nine in 10 contacts, compared with up to four last year.
India has recorded 16.96million infections and 192,311 coronavirus deaths, health ministry data shows. But experts say the death count is probably far higher. The surge is expected to peak in mid-May with the daily count of infections reaching half a million, the Indian Express said, citing an internal government assessment. /Reuters and
Just two weeks ago, the IMF upgraded India’s economic growth forecast to 12.5% — the quickest rate among major economies. Now, as Covid-19 cases surge the most globally, that bullish view is looking in doubt.
In Delhi, India’s political capital, the streets are mostly empty and the markets nearly deserted with almost all shops closed in response to curbs instituted by the local administration to fight the pandemic. The scene is not so different in Mumbai, the financial hub that accounts for 6% of the national output.
Yet, Prime Minister Narendra Modi is shunning a nationwide lockdown and encouraging states to keep their economies open. And for that reason, economists are signalling risks to their forecasts, but not tearing them up all together just yet.
“This second wave of virus cases may delay the recovery, but it is unlikely in Fitch’s view to derail it,” the ratings company said in an April 22 statement. It stuck to its 12.8% GDP growth forecast for the 12 months through March 2022.
The Reserve Bank of India (RBI) this month also retained its growth estimate of 10.5% for this fiscal year.
But governor Shaktikanta Das said the surge in infections impart greater uncertainty and could delay economic activity from returning to normalcy.
High-frequency data is already pointing to a deepening contraction in retail activity in the week through April 18 relative to its prepandemic January 2020 level, said Bloomberg Economics’ Abhishek Gupta. That is a key risk for an economy in which consumption makes up about 60% of GDP.
“Localised containment measures will act as a drag on growth,” said Teresa John, an analyst at Nirmal Bang Equities in Mumbai, given that 10 Indian states that account for about 80% of the country’s Covid-19 cases contribute nearly 65% of the national output. Still, John left her “conservative” growth estimate unchanged at 7% for the fiscal year.
The reluctance by economists to revisit growth forecasts just yet possibly stems from expectations for the crisis to blow over soon. Fuelling that confidence is a vaccination drive that has covered more than 100million people of the nation’s more than 1.3-billion total, besides the promise of continued support from fiscal and monetary policymakers.
“While the rapidity with which cases are rising is high, it is also expected that this wave will be relatively short-lived,” said Kotak Mahindra Bank’s Upasna Bhardwaj, who is among the few to have downgraded the economy’s growth forecast — by 50 basis points to 10% for the current year.
“Nonetheless, uncertainty remains,” she said.
That uncertainty does not look to be going away soon, with India reporting a record 349,691 new coronavirus cases and 2,767 deaths on Sunday. With almost 17-million cases in total, it is the second-worst affected nation globally, lagging only the
US. Bloomberg’s Virus Tracker shows that only about 11 out of 100 people in India have received a vaccine dose.
While the outbreak has overwhelmed the nation’s hospitals and crematoriums, it has also hit consumer confidence in an economy that was beginning to recover from an unprecedented recession last year.
“The surge in infections has led to the reimposition of partial lockdowns in the more affected cities and states, and could trigger full lockdowns if the situation worsens,” said Kristy Fong, investment director for Asian equities at Aberdeen Standard.
“This will have a knock-on impact on the reopening of the economy and recovery prospects,” she said.
WORST PERFORMER
Those concerns have contributed to the nation’s benchmark stocks index becoming Asia’s worst performer this month, while the rupee put up by far the region’s poorest show over the past month as traders factored in the effect of the curbs on economic growth.
Though policymakers have signalled they are ready to take steps to support growth, a failure to flatten the virus curve could exert pressure on monetary and fiscal policies that have already used up most of the conventional space available to them.
The government has limited fiscal headroom, having pencilled in a near-record borrowing of 12.1-trillion rupees this year to spur spending in the economy. For its part, the RBI has stood pat since cutting interest rates to a record low last year. It has instead relied on unorthodox tools, including announcing a government securities acquisition programme, to keep borrowing costs in check.
Sovereign bonds are also facing the possibility of more supply if the government needs to spend more to deal with the second wave.
Demand is tepid at auctions and the market is banking on central bank support to help ease the supply pressure.
“Given the heavy borrowing programme and the evolving macro situation wherein growth concerns are again coming back due to the second wave of the pandemic and on the other side inflation could remain sticky, we think bond yields will struggle to soften despite RBI’s very laudable efforts,” said B Prasanna, head of global markets, trading, sales and research at Icici Bank.
With or without lockdowns, some economists see the pandemic weighing on the confidence of consumers — the backbone of the economy.
“The rising burden of case counts could prove to be a negative distraction to the growth momentum and economic recovery,” said Shubhada Rao, founder of QuantEco Research in Mumbai, who sees a hit to the services sector, especially the contact-intense kind. “Potentially, this could dent growth by a percentage point.”