MUMBAI, Aug. 10 (Xinhua) -- India crossed the grim mark of over 2 million cases of COVID-19 last week, with consumption, supply chain and production disrupted across the country as a fallout of the nation-wide lock-down amid the continuing pandemic.
Asia's third-largest economy continues to remain under partial lockdown in parts of the country due to rising cases of the virus that has led to tremendous pressure on livelihood.
"Localized lockdowns have pointed to some fatigue in the recovery in July, nevertheless, there has been no sharp reversal. In sum, while the worst is likely behind us, the recovery is likely to be uneven," said Teresa John, an economist with Nirmal Bang Securities, a domestic stock brokerage house.
The Purchasing Managers' Index (PMI) for July also witnessed a marginal dip with contraction largely on account of lower output amid subdued demand.
Drawing a parallel with demonetization in November 2016, Aayushi Chaudhary, an economist of the HSBC Securities and Capital Markets (India) said, "The demonetization shock lasted for a relatively short period as it was soon followed by remonetization (via new currency notes). While the medium of exchange was unsettled for some time, the production of goods and services did not stop."
In the case of COVID-19, said the expert, it has already been four months of (full-to-partial) lockdown, with no clear end in sight. And the production of goods and services has been hugely disrupted.
"As such, the economic consequence of COVID-19 is likely to be of a larger and grimmer proportion than demonetization," said Chaudhary.
The spread of the virus has largely been uneven, with the top five out of all states in the country, namely the western state of Maharashtra, southern states of Tamil Nadu along Karnataka, northern state of Uttar Pradesh and Delhi, accounting for 62 percent of the total cases in the country.
The country, which has so far tested over 24 million samples since the outbreak, is facing fragile macroeconomic and financial conditions due to unabated rise in COVID-19 infections.
While the virus cases in slums of metro cities are largely been addressed, the spread has moved towards hinterland. In fact, a survey in Mumbai had indicated that 57 percent residents of slums had anti-bodies compared to 16 percent of residents staying in the city's apartments.
Mortality rate in the country has been 2.05 percent, comparatively lower to the world average of 3.77 percent.
Taking cognizance of the economic impact of the pandemic, India's Central Bank continued with its accommodative stance and kept its policy rates unchanged as disrupted supply chains both in food and non-food segment kept the inflation rate high beyond its comfort zone of 2 percent to 6 percent.
"The disruptions caused by COVID-19 have led to heightened financial stress for borrowers across the board," said Shaktikanta Das, governor of India's Central Bank.
However, there are some silver linings.
New Delhi, the capital and the worst affected city, has seen continuous improvement in traffic congestion index, which is above the levels seen in early March while rural and urban unemployment are also back to pre-COVID levels.
The surging benchmark indices on the stock exchanges, driven by liquidity, has been seen as another indication, even as rating agencies and global investment bankers have indicated towards a contraction of economic growth.
However, as former chief economist of the World Bank Kaushik Basu has recently said at a forum, India's economic growth in 2020-2021 budget year is likely to be the lowest since its independence in 1947.