Damaged countryside in India could jeopardize recovery

Indian financial markets have started a strong recovery after the recession caused by the country’s devastating second wave of coronavirus, with shares nearing records.

But outside the city, rural families are still connecting their lives, despite public health officials warning that a third wave is imminent.

“You can see the title number Dharmakirti Joshi, chief economist at CRISIL, a credit rating agency, said:

The shocking human costs of the Covid wave in India were revealed last month by drone footage showing hundreds of shallow graves along the Holy Ganges.

Despite the acceleration of vaccination, analysts say the disaster is also weighing on India’s economic outlook, consumer demand Policy makers wanted to boost growth.

“A psychologically traumatized population,” said Jahangir Aziz, head of emerging markets economics at JP Morgan. “All investment plans – all consumer durables plans – will be postponed.”

Until the advent of the delta variant, first detected by Indian scientists in rural Maharashtra in February, India’s economy was expected to post double-digit growth after contracting 7.3% last year . ..

However, the second wave pushed the Reserve Bank of India’s consumer confidence index from 84 before the pandemic to a record high of 48.5. As of April 1, the virus has infected around 18 million people and is known to have killed at least 232,000 people. Analysts The real balance sheet It’s much higher.

The RBI recently lowered its GDP growth forecast for this year from 10.5% to 9.5%. JP Morgan predicts India will only grow 9%, and Aziz said the economy will be around 10% lower than expected before the pandemic.

“Anyone who is crazy about the global market will be very successful,” he said. “But Indian consumption, Indian investments and Indian SMEs will suffer at unimaginable levels. Beyond the necessities, people will be very, very careful about the purchase. “

Indian workers were hit hard last year when a strict blockade wiped out 100 million jobs overnight, forcing them to flee to the countryside. At the end of 2020, around 15 million urban workers are still unemployed and workers’ income is lower than it was before, according to a study by Azim Premji University.

Powerful performance Agriculture Heavy monsoon rains increased 3.6% last year, and heavy government spending on local labor plans helped soften the blow.

But in countries where patients pay nearly 70% of their medical bills, the outbreak of Covid has helped millions of families use their savings, sell their assets and care for sick loved ones. I had to borrow it.

The shock is likely to depress consumer morale for months, especially among middle-class and working-class families. “‘Medical costs This eats away at household balance sheets, especially poor households,” Joshi said.

Shobhnath Patel, a 38-year-old karate instructor living in rural Uttar Pradesh, said his family was canceled after a pandemic canceled classes, two nephews lost their jobs in the industry his brother’s automobile and paint business. house collapsed. He said he had a hard time.

When his brother was attacked by Covid in April, the family ran out of savings of 80,000 rupees ($ 1,080) on ambulances, doctors’ expenses, oxygen bombs, medication and hospital bills from the nearby city of Varanasi. .. he.

The village of Patel, another family from Patelwa, suffered similar setbacks. The virus attacked at least one member of each household and killed around 12 people.

“The financial situation of most people is going through a very difficult time,” Patel told the Financial Times. “So many people have spent a lot of money looking after their families. You have to put a wedding, a house building project, or one of those great things on hold. All families are suffering. “

Distracted by the second wave, many Indians seem to let go of the inevitability of the third wave. “There is so much uncertainty,” Joshi said. “No one can predict how serious the other waves will be.”

India has so far received 315 million vaccines, or about 23 per 100 people, and the pace of vaccination is accelerating but well below the norm for a safe economic recovery. .. However, as Aziz of JP Morgan pointed out, “with increased mobility comes the risk of reigniting another wave”.

Pessimism is not universal. Saurabh Mukherjea, founder of Marcellus Investment Managers, said “business is recovering quickly” as deregulation, insecure public transport and cheap finance are boosting demand for cars and motorcycles. ing. “Nobody wants to take public transport,” he said.

But he acknowledged that the sustainability of the recovery in consumer demand depends on the trajectory of the virus. “If we get into the third wave, we’ll come back to stagnation. “