Third Covid-19 wave unlikely to be as devastating as second: FinMin

Says 68% of the population above six years has antibodies, which would reduce the likelihood of infection

The Finance Ministry on Tues­day said that the third wave of Covid-19 is unlikely to be as devastating as the second as about 68 per cent of the population aged above six has antibodies, which would reduce the likelihood of infection.
 
It further said that the economic impact of the second wave is likely to be muted and there are visible signs of economic rejuvenation. However, the ministry raised concerns over the resurgence of active cases, which rose by July end, with the positivity rate inching up to 2.42 per cent during the month.
 
“The recent seroprevalence results signify that India can soon limit hospitalisation and deaths due to Covid infection if we sustain the momentum of the vaccination programme. Having antibodies reduces the probability of acquiring serious illnesses, as is borne out by studies. So, any subsequent waves are expected to be mild in their impact on hospitalisations and deaths,” said the Monthly Economic Review released by the Department of Economic Affairs.

 

However, at this juncture, it said, the economy and society are at a crucial inflection point, where sustenance of economic recovery, vaccination progress, and Covid-19 appropriate beh­avioural strategies need to work in synergy. The report highlighted that the vaccination drive continues to gather speed and breadth. As on date, cumulative doses administered stood at 514.5 million—49.8 per cent of the adult population have received the first dose and 14.2 per cent have been fully vaccinated.
 
However, inflation remained above the six per cent band in May and June but these pressures are likely to smo­ot­hen in the coming months with easing of curbs, progress of southwest monso­on, and recent supply-side policy inte­rventions in pulses and oilseeds market.

 
On the recovery front, it said that with the second wave abating and state governments easing restrictions, there have been visible signs of economic rejuvenation since the second half of May. This resonates with the expectation that the impact of the second wave will be muted. This is backed by the movement of high-frequency indicators in July that clearly point to broad-based economic revival.
 
For instance, PMI manufacturing sharply rebounded to the expansionary zone in July across output and input sub-components of the index. Mar­king swift economic recovery, GST collection has recla­imed its Rs 1 trillion-plus territory in July, signifying increased business and consumer activity.

 
Rail freight at 112.7 million tonnes (MT) in July hit a record for the month and registered 18.3 per cent growth (YoY) and 13.2 per cent compared to July 2019. However, G-sec yield curve steepened mildly owing to inflation pressures, it said. The ministry added that bank credit growth showed encouraging trends with non-food credit growth crossing the 6.5 per cent in the fortnight ended July 16, after remaining muted for nine fortnights.
 
On the sectoral front, credit offtake growth in agriculture and allied activities, and micro, small, and medium industries accelerated in June, demonstrating positive effects of the implementation of the Aatm­anirbhar Bharat package. The central government’s fina­nces showed an improved performance during the June quarter, as compared with the year-ago period. It was on the back of buoyant direct and indirect tax collections, continued emphasis on capital expenditure with 26.30 per cent growth during the quarter, and re-prioritisation of revenue expenditure, it said.

 
The latest available data on the growth of eight core industries, auto sal­es, tractor sales, port traffic, air passenger traffic also indicate sequential impr­ovement from the contraction induced by the second wave.
 
While systemic liquidity continued to remain in surplus in July, a decline in growth of cash in circulation reflected a shift away from pandemic-induced precautionary savings.