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India Inc says economic growth may not be significantly impacted though minor supply-side glitches may surface

Will rise in Covid cases impact economic recovery?

India Inc is not overtly worried despite the spike in fresh Covid 19 cases in India in the last few days though “some minor supply side glitch” cannot be ruled out.

While the aviation, hospitality and tourism sectors would be impacted, the other industries are likely to sail through this period as reports suggest that the current wave will not only be short-lived but with a large section of the population being inoculated, the infection this time could be milder.

“We are more matured in dealing with the virus now, we are aware and prepared now, so I don’t see this impacting the economy very significantly,” Deepak Sood, secretary general, Assocham, told India Narrative.

Authorities have indicated that despite the surge in numbers, there will be no national lockdown. “We do not anticipate any national lockdown but Covid related restrictions have started kicking in and going forward, there could be measures which would be local in nature depending on the virus situation and case load,” an insider said.

Also read: Tourism and hospitality sector may take a little longer to recover but overall growth story may not be impacted despite rise in Covid numbers

Sood, however, added that the situation is an unfolding one.

Most projections had until now shown a rapid turnaround in the Indian economy. According to a recent report by British firm Cebr, India, which is the fastest growing economies among the G20 nations, is set to overtake the French economy in 2022 and Britain by 2023.

The surge in the Omicron variant of the virus has forced several states to take precautionary measures. Maharashtra, Delhi, West Bengal among others have already announced night curfews and restricted gatherings. Schools and colleges have been shut.

“The government will do the needful but the economic growth story will remain in-tact as the economic recovery is on fast track. All steps will be taken to ensure that a conducive business environment is maintained and any bottlenecks in case of supply side, will be taken care of,” Gopal Krishna Agarwal, BJP’s national spokesperson on economic affairs said.

He added that the government will pursue more reform measures that would push growth in a more sustained manner.

While the strong base effect in the first two quarters of 2021-22 due to a contraction in the corresponding period of 2020-21 helped push growth, the advantage will erode in the subsequent quarters. The economic indicators of the third and the fourth quarters in the current fiscal and the next financial year will reflect the real growth story.