Mobility indicators like people going out for recreational activities or walks in public places tell a lot about at what pace markets are opening up and control over Covid-19 infection levels.
Mobility indicators like people going out for recreational activities or walks in public places tell a lot about at what pace markets are opening up and control over Covid-19 infection levels. Analysing these mobility indicators across countries, a report by Care Ratings noted that for India, the retail and recreation footfalls have declined by 21 per cent when compared to pre-Covid-19 era (January-February 2020). “It can be seen that countries which have a lower number of infections tend to be more open when it comes to retail and recreation. The number of infections should however be looked at from the point of view of their population,” read the report.
According to the mobility indicators, the seven days moving average of new Coronavirus infections (till July 16, 2021) stood at 40,827. During this time, grocery and pharmacy footfalls were at 26 per cent. Apart from this, workplace, parks and station footfalls have declined at the rate of 25 per cent, 9 per cent and 11 per cent, respectively.
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This means that in order for the Indian economy to open up more and witness growth, the number of infections has to come down sharply. The report highlighted that the services sector took a major hit and it will continue to witness lower footfalls, implying the retail and recreation factor will continue to be restricted for a longer period of time. Further, the employment in this sector- retail and recreation related (which includes tourism, hotels, travel) will also be under pressure.
As of now, the growth momentum this year is likely to come from agriculture and manufacturing as services beyond the government and financial services are expected to be subdued for the second successive year. “Given that India is a services-driven economy, it is significant,” the research note said. The note added that the economic growth in India will also be slow whereas the pace of recovery is expected to be gradual. “We believe that our earlier forecast of 8.8-9 per cent growth in GDP will hold with momentum being witnessed only in the third quarter. The second quarter will be less buoyant on account of the services sector still being restricted to a large extent. Statistically however, growth would be high in the second quarter,” analysts at Care Ratings said.
It is to note that there are two sets of forces that are operating during the year. The first one is the lockdown phase that disrupted the economy in May and June and the other aspect is the base effect which will lead to an increase in growth numbers for sure through the quarters. For now, GVA for the FY22 has been estimated at 7.8 per cent. The projections have been made keeping aside any significant additional expenditure by the government for this year apart from what the government has already announced for fiscal stimulus.