NEW DELHI – The coronavirus continues to plague India’s damaged economy, putting Prime Minister Narendra Modi under increasing pressure to promote a nascent recovery and get the country back to work.
The coronavirus, which has struck in two waves, has killed hundreds of thousands of people and sometimes brought cities to a standstill. The number of infections and deaths has decreased and the country is returning to work. Economists predict on paper that growth could pick up in the second half of the year.
However, it can take years to undo the damage. According to India Ratings, a rating agency, economic output in the period April-June this year was 9.2 percent lower than in the same period in 2019.
The coronavirus has essentially robbed India of much of the momentum it needed to provide jobs for its young and burgeoning workforce. It has also exacerbated the longer-term problems that have already held back growth, such as high debt, a lack of competitiveness with other countries and policy missteps.
Economists are particularly concerned about the slow pace of vaccinations and the possibility of a third wave of the coronavirus, which could prove disastrous for any economic recovery.
“Vaccination progress remains slow,” Priyanka Kishore, head of India and Southeast Asia at Oxford Economics, with only 11 percent of the population fully vaccinated so far, said in a research briefing last week. The company cut its growth rate for 2021 to 8.8 percent, from 9.1 percent.
Even 8.8 percent growth would be a strong number in better times. Compared to the previous year, India’s economy grew 20.1 percent from April to June, according to estimates released Tuesday evening by the Ministry of Statistics and Program Implementation.
But those comparisons benefit from comparison with India’s dismal performance last year. The economy shrank 7.3 percent last year, when the government shut down the economy to halt a first wave of the coronavirus. That led to major job losses, now one of the biggest hurdles to growth, experts say.
Real household incomes have fallen further this year, said Mahesh Vyas, the director of the Center for Monitoring Indian Economy. “Until this is fixed,” he said, “the Indian economy cannot recover.”
At least 3.2 million Indians lost stable, well-paid jobs in July alone, Vyas estimates. Small traders and day laborers suffered more job losses than others during the lockdowns, although they were able to return to work once restrictions were lifted, Mr Vyas said in a report earlier this month. “Payable jobs are not equally elastic,” he said. “It’s hard to get back a lost paying job.”
About 10 million people have lost such jobs since the start of the pandemic, Mr Vyas said.
Earlier this month, Modi’s government took steps to revive the economy by selling stakes worth nearly $81 billion in state properties such as airports, train stations and stadiums. But economists see the policy largely as a move to generate money in the short term. It remains to be seen whether it will lead to more investment, they say.
“The whole idea is that the government will borrow this money from the domestic market,” said Devendra Kumar Pant, chief economist at India Ratings. “But what happens if this project goes to a domestic player and he has to borrow from the domestic market? Your domestic credit demand does not change.”
dr. Pant added that questions remained about the willingness of private players to keep these assets long-term and how monetization policies will ultimately affect prices for consumers.
“In India, in the worst case scenario, things will decline rather than improve,” he said, adding that costs to users of highways and other infrastructure could rise.
Understanding Vaccine and Mask Mandates in the US
- Vaccine Rules. On August 23, the Food and Drug Administration gave full approval to Pfizer-BioNTech’s coronavirus vaccine for people 16 and older, paving the way for an increase in mandates in both the public and private sectors. Private companies are increasingly mandating vaccines for employees. Such mandates are permitted by law and have been confirmed in court proceedings.
- Mask Rules. The Centers for Disease Control and Prevention recommended in July that all Americans, regardless of vaccination status, wear masks in indoor public places in areas with outbreaks, a reversal of the guidance it offered in May. Find out where CDC guidelines apply and where states have their own masking policies. The battle over masks has become controversial in some states, with some local leaders defying state bans.
- College and universities. More than 400 colleges and universities are demanding that students be vaccinated against Covid-19. Nearly all of them are in states that voted for President Biden.
- schools. Both California and New York City have introduced vaccine mandates for educators. A survey published in August found that many U.S. parents of school-aged children are opposed to mandatory vaccines for students, but were more in favor of mask mandates for students, teachers and staff who have not received their injections.
- Hospitals and Medical Centers. Many hospitals and major health systems require workers to receive a Covid-19 vaccine, citing the increasing caseload fueled by the Delta variant and persistently low vaccination coverage in their communities, even within their workforce.
- New York City. Evidence of vaccination is required from employees and customers for indoor meals, gyms, performances and other indoor situations, although enforcement will not begin until September 13. Teachers and other education workers in the city’s vast school system must have at least one vaccine dose by Sept. 27, without the option of weekly testing. City hospital employees should also receive a vaccine or be tested weekly. Similar rules apply to employees in New York State.
- At the federal level. The Pentagon announced it would aim to make coronavirus vaccinations mandatory for the country’s 1.3 million active-duty troops “by mid-September.” President Biden announced that all civilian federal employees would be required to be vaccinated against the coronavirus or undergo regular testing, social distancing, mask requirements and restrictions on most travel.
During the second wave in May, Mr. Modi resisted calls from many epidemiologists, including Dr. Anthony Fauci, the director of the US National Institute of Allergy and Infectious Diseases, to reinstate a nationwide lockdown.
The lockdowns in 2021 were not nearly as severe as last year’s rural curbs, which drove millions of people out of cities and into the countryside, often on foot because rail and other transport had been suspended.
During the second wave, core infrastructure projects across the country, which employ millions of domestic migrant workers, were exempted from restrictions. More than 15,000 miles of Indian highway projects, along with improvements to rail and urban subways, went ahead.
On Tuesday, Dr. Pant said India’s 20.1 percent growth estimates for the period from April to June were nothing but an “illusion.” Growth shrank so sharply around the same period last year, at a record 24 percent, that even a double-digit gain this year would leave the economy at the level it was two years ago.
Economists say India needs to spend, even spend, to unlock the full potential of its massive low-skilled workforce. “There is a need for very basic primary health care, primary services to provide nutrition to children,” said Mr. vyas. “These are all very labor-intensive jobs and these are largely government services.”
One reason, said Mr Vyas, that Indian governments have typically not spent in those areas is because it was considered “not a sexy thing to do”. Another is governments’ “dogmatic fixation” on keeping budget deficits in check, he said. The government simply cannot rely solely on the private sector for job creation, said Mr. vyas.
The “only solution,” he said, is for the government to spend and encourage private investment. “You have a demotivated private sector because there is not enough demand. That is what stops India.”