India | Worsening health conditions crystalise downside risks

The rapidly swelling second wave has taken a big toll on the country’s health infrastructure. The health system has collapsed in the worst hit states, with even the national capital, Delhi, facing acute shortage of oxygen and Covid-19 hospital beds. While the official mortality rate has edged lower, it masks a rapidly rising death count. Deaths are now doubling every ten days (as opposed to an average of 29 days in the first wave) and even this figure is likely buttressed by delayed or under-reporting of deaths.

What you will learn from this report:

• India’s escalating health burden, faltering vaccination rate, and lack of a convincing government strategy to contain the pandemic have prompted us to downgrade our 2021 GDP growth forecast to 10.2% from 11.8% previously.
• GDP is expected to contract sequentially in Q2 and average 1.47% q/q sa in 2021. This is a notable downgrade from our pre-second wave average growth forecast of 1.64%, but represents a modest uptick from 1.44% in 2020.
•  Notwithstanding the likelihood of further mobility restrictions, we expect India’s targeted lockdown approach, less stringent restrictions, and resilient consumer and business behaviour to mitigate the economic impact of the second wave.