While the ferocity of the COVID-19 second wave overwhelmed India and the world, war efforts have been mounted to stop the second surge in its tracks, stated the banking regulator Reserve Bank of India in its monthly bulletin.
The bulletin stated, “The resurgence of COVID-19 has dented but not debilitated economic activity in the first half of Q1: 2021-22.” However, the regulator stated the biggest toll of the second wave “is in terms of a demand shock - loss of mobility, discretionary spending and employment, besides inventory accumulation, while the aggregate supply is less impacted.” Real economy indicators moderated through April-May 2021, RBI added.
In addition, RBI stated in its report that “the loss of momentum (of the economic activity) is not as severe as at this time a year ago.”
In the report prepared by Michael Patra, Deputy Governor along with others, stated, “The impact of the new infections appears to be U-shaped.” The two sectors that are weathering the COVID-19’s effect on the economy are agriculture at one end and IT on the other. Both sectors represent each shoulder of the U.
“On the slopes of the U are organised and automated manufacturing on one side and on the other, services that can be delivered remotely and do not require producers and consumers to move.” These activities continue to function under pandemic protocols.
RBI added the most vulnerable in this U-shaped economy is “blue collar groups who have to risk exposure for a living and for rest of society to survive; doctors and healthcare workers; law and order; and municipal personnel; individuals eking out daily livelihood; small businesses, organised and unorganised - and they will warrant priority in policy interventions.”
It is in this direction that the Reserve Bank, re-armed and re-loaded, has stepped out. This is the beginning. There is more work to be done, added RBI.