The Omicron variant of the Coronavirus will hit GDP for the March 2021-22 quarter by 0.40 percent, cutting 0.10 percent from the current fiscal year’s overall growth as many states resort to restrictions to prevent infections limit, according to India Ratings and Research. in a note.
Curbs in various forms, such as reducing the capacity of the market and market complexes and night and weekend clocks to control human mobility/contact, have already started in several states, affecting economic activities, the agency said.
The increase in the number of cases over the past two weeks will negatively impact fourth-quarter GDP and growth will come in at 5.7 percent in the quarter, which is 0.40 percent lower than the earlier estimate of 6. .1 percent. For the whole of 2021-22, GDP is expected to clock a growth rate of 9.3 percent, 0.10 percent lower than previously estimated, it further noted.
The revision of the estimates comes amid a massive surge in Coronavirus infections across the country, especially in the metro. A majority of the new cases are suspected to be of the Omicron variant of the coronavirus, which is suspected to spread rapidly and also evade previous vaccinations.
Indications so far suggest the infections are milder and usually not life-threatening, the rating agency said, adding that restrictions imposed by local governments will be less disruptive than those during the first two waves of the coronavirus.
Both government and business are better equipped to deal with the situation and be more resilient, it said, expecting the impact of COVID 3.0 to be lower than that of COVID 1.0 and 2.0, it noted.
According to the report, the economy will recover quite quickly once the third wave subsides.
Policy support – both monetary and fiscal – would be “critical” until the threat of a pandemic persists and the economy enters the stage of a sustained growth trajectory, it added.