Economic impact of 2nd wave won’t be significant: CEA – Times of India



    NEW DELHI: The overall economic impact of the second wave of the pandemic will not be very significant, the government’s chief economist Krishnamurthy Subramanian said on Monday, adding that he expected manufacturing activity to bounce back in the coming months, resulting in higher demand for several services.
    “…contact-sensitive sectors will feed on manufacturing growth. The contact-sensitive sectors will depend on the pace of vaccination,” the chief economic adviser (CEA) told reporters after the fourth quarter GDP data for 2020-21 was released. The government’s estimate also factors in the forecast of normal monsoon, resulting in robust rural demand, which was resilient last year.
    He, however, underlined the need to enhance the pace of vaccination against Covid. “Vaccination is important not only for the health of the people but also for the health of the economy,” Subramanian said.
    This is the first evaluation from the government, although the CEA refrained from putting any numbers. He said the assessment was based on the second wave of infections having peaked in mid-May.
    Subramanian said that the e-way bills data and power consumption pointed to the bottoming out of the impact of the lockdown across several states with initial signs of a pick-up. The government, however, took on board the impact on parameters such as mobility and the impact of the restrictions being felt across some large states.
    Taking forward finance minister Nirmala Sitharaman’s statement on the demand for stimulus in a TOI interview, the CEA said that the government had announced an expansionary Budget and with infrastructure spending picking up once the lockdown eases, the economy will benefit.


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