Economy slumped as Covid-19 second wave batters India

NEW DELHI – India is going through the second wave of the Covid-19 pandemic as the single-day spike crossed 400,000 cases last week, and the total tally almost reached 20 million.

Amid the prevailing conditions, the overall Indian economy, mired in a recession since last year due to Covid-19, has been dragged down further by the second wave of the pandemic.

Most industries and the manufacturing sector are either shut or working at a much lesser capacity. The workforce in non-essential services has moved back home and is working online.

Once again, offices have been closed and supplementary businesses depending on corporate employees, like the food and hospitality sector, have been hit hard.

In a bid to curb the raging pandemic, more than 10 states, including Delhi, have imposed partial or complete lockdowns, and five states, such as Nagaland, are observing night curfews.

While essential services are allowed to operate, the rest have been shut till further notice. The work-from-home mode in both government offices and private enterprises is encouraged, and people are suggested to stay indoors unless it is very urgent to step out.

Food industry hit hard

Small restaurant owners, online food suppliers, and hotel chains are the worst hit.

Ramesh Chandrikant, who runs a chain of restaurants in Gurugram, an IT hub adjoining Delhi, said he had expected things to return to normal as new Covid-19 cases per day had come down to the level of below 10,000 by the end of January.

“But then this second wave hit the country, and the situation changed from bad to worse. After nearly one year of the pandemic, we were expecting that it was all over and all IT and software firms’ employees would return to their offices. Now, I don’t see them coming back anytime soon this year,” said Chandrikant.

“Most of the IT and software firms’ employees stay here alone or as a couple with both husband and wife working. Most of them depended on our food services, and we had a good business all these years before Covid-19,” he added. “Now, since nearly 90 percent of them are working from homes located in different states, our business is totally ruined.”

Ulhas Shantaram Muke, president of the largest tiffin suppliers’ association in the financial capital Mumbai, also had a similar story to tell.

“We have nearly 5,000 tiffin suppliers in our association. We are into the business of supplying tiffins to one and all in Mumbai who work here, be it an office, business establishment, a factory, or Bollywood. Tiffin-supplying is one of the oldest and most popular businesses in Mumbai,” he said.

But now with the second wave of the pandemic, “we have been rendered jobless once again,” he added. “Now we have no source of livelihood and are dependent on others’ charity or donations for arranging food for our own family.”

However, patients suffering from the pandemic and in-home isolation depend on food delivery.

Ashok Dixit, a senior citizen and resident of Gurugram under home quarantine for over two weeks with his wife and daughter, said his family orders food from a local kitchen every day.

“All three of us are sick. We are not in a position to cook for ourselves. We have no option but to order food from outside. Our regular maid, who used to cook in normal times, has been asked to stay at her home,” Dixit said.

He added that a local residents’ welfare society has authorized a couple of restaurant owners, who were rendered jobless, to supply food by delivering it to their doorstep.

Hotel industry hit hard

It’s summertime in India. Around this time, schools are shut for annual vacations and families normally venture out, particularly in the hills.

The four months from April to July used to be the peak season for the hotel industry, particularly thanks to domestic tourists.

The second wave of Covid-19 and resultant lockdown have again brought the travel industry to a halt. The Hotel Association of India (HAI) has written to the federal government to seek liquidity support in the form of lower interest rates, and further customization in the Emergency Credit Line Guarantee Scheme.

According to reliable sources in the hotel industry, the HAI has also sought a complete or partial waiver of statutory expenses like property taxes, lease rentals, license fees, and excise fees. The letter to the association emphasized that the second Covid-19 wave has stopped the recovery of the hospitality and tourism sector.

The hospitality sector, including the hotel industry, was shut for nearly six to eight months last year. It was allowed to reopen in a staggering manner, and was on a path to recovery thanks to domestic tourism, weddings and family get-togethers.

But that progress has been reversed by lockdowns in some states, night and weekend curfews, reduced limits on the number of guests allowed for functions and other restrictions.

“The hotel industry has the business season only for a few months, and the rest of the year we pay our employees from the money generated in those few months,” Shashank Pandey, who runs four hotel properties in north India under his brand name “Aspen Adventures,” told Xinhua.

“The present months, i.e. April to July, used to be the peak season for us every year. But this year absolutely no business as the COVID-19 second wave occupies everyone’s mind,” Pandey said.

Hotel bookings fall 75%

Shahzad Aslam, head of sales at Leisure Hotels Group told English daily Financial Express that due to the prevailing second wave, hotel bookings have fallen by over 75 percent.

He said this year’s summer vacation period is going to be a lean one, though he seemed hopeful about bookings from travelers in the form of staycations and workcations at resorts.

He told the newspaper that the pandemic continues to wreak havoc on all industries, with travel, hospitality and aviation bearing the brunt. Yet he said he remained optimistic because the forthcoming vaccinations would help lift bookings from June.

“We continue to receive inquiries this month from travelers searching for staycation and workcation packages in our resorts, which are naturally isolated and in remote locations,” he added.

Growth projection mixed

Last month, global rating agency Moody’s said that the targeted curbs imposed by the Indian government to control the surge coupled with rapid vaccination will mitigate the second wave’s overall adverse impact on the Indian economy.

In its forecast amid the second wave, the rating agency stated that India’s gross domestic product (GDP) was still likely to grow in the double digits in 2021.

The International Monetary Fund had last month raised its growth forecast for the Indian economy to 12.5 percent from 11.5 percent estimated in January. However, it mentioned that the forecast faced downside risks due to the second wave of COVID-19.

Meanwhile, India’s own rating agency ICRA had forecast that the country’s GDP would grow by 10-10.5 percent in the financial year 2021-22 due to the second wave of COVID-19. It also stated that the present wave will dampen the recovery pace for India.

S&P Global Ratings stated at the end of April that it may revisit its growth projection of 11 percent for India this year, and added that the rise in infections dampens the country’s economic recovery with several indicators losing momentum.