India is fighting the second wave of Covid-19

07 May 2021 00:00 Economy

The situation in India is dramatic and has an increasing effect on the economy. This is reported by Peter Deubet, head of the Mumbai
Representative office at Port of Hamburg Marketing.

India was hit with full vigour by the second wave of Covid-19. With more than 400,000 new infections and 3,500 registered deaths per day, India is breaking all previous records. India now has more than 18 million corona cases and more than 200,000 deaths recorded. The real figure, including the dark numbers, is estimated to be much higher.

The drastic increase in the number of cases is most likely related to various factors: the new, more aggressive virus mutation, B.1.617, now known as the Indian variant, religious festivals in the north (Kumbh Mela), elections and election campaign events in the west (taking place since March 27th in West Bengal), poor hygiene measures, slow progress in the vaccination campaign, but also an increasingly careless population.

Whereas the first lockdown particularly hit the poorer part of the population, now all sections of the population are affected. The high number of cases in combination with the dilapidated health infrastructure led to dramatic scenes in the country: The medical crisis and lack of oxygen are so blatant that large-scale relief operations and deliveries of urgently needed medical goods to India have now started. The age restriction for vaccination has been lifted at the beginning of May – but there is not enough vaccine available.

In contrast to last year, the central government has not enacted a nationwide lockdown. The decision rests with the states – the situation varies accordingly. A strict lockdown was imposed in most regions though until mid-May.

In most cases, this means that you can only leave the house with a valid reason. Furthermore, only pharmacies and grocery stores are open. A controlled shutdown has been put in place through the reduction of employee numbers in the factories, unless considered ‘essential’ or work for export. Gatherings have been banned and all trade fairs were cancelled until September.

There are no official restrictions in domestic freight traffic in India (trucks, ships) and passenger traffic is also possible between states, with a negative covid-19 test result. However, due to capacity bottlenecks, companies must foot significant transport cost increases.

Air traffic between Germany and India has been maintained so far, but mainly for repatriation and transport purposes. Germany recently classified India as a high risk – and virus variant area. Entry from India is only permitted for citizens and holders of a residence permit – and then only under strict conditions.

The optimistic macroeconomic projections of double-digit economic growth therefore start to falter. For the past fiscal year (until March 31, 2021), the government expects a shortfall of 7.7 percent. The budget for the coming fiscal year provides for new debt of 6.9 percent of gross domestic product. Tax and tariff increases were largely renounced.

The exports to Germany shrunk by almost 6 percent last year. Imports from Germany shrunk by a good 11 percent.

India is fighting the second wave of Covid-19