The growth narrative is starting to crack for India.
Over the weekend, the country became the first globally to log more than 400,000 new COVID cases in a single day (figure below), a harrowing milestone to be sure.
It’s painfully obvious that the true number of fatalities is woefully understated and will probably only be known in hindsight, but the official daily death toll climbed towards 4,000, tragic enough in its own right.
Last month, I gently suggested that “growth estimates for India made prior to the current surge may soon be out of reach,” although forecasters weren’t yet ready to throw in the towel.
Fast forward a week, and the commentary is more circumspect, even as the international community is taking steps to help alleviate the country’s suffering.
IHS Markit’s factory activity gauge for India held up in April, but the accompanying color was cautious. “The PMI results for April showed a further slowdown in rates of growth for new orders and output, both of which eased to eight-month lows amid the intensification of the COVID-19 crisis,” the release said, adding that although “the downturn in employment eased and business confidence towards the one-year outlook strengthened, the headwinds facing manufacturers cannot be ignored [as] the surge in COVID-19 cases could dampen demand further when firms’ financials are already susceptible to the hurdle of rising global prices.”
Barclays slashed its growth outlook for the country Monday (“all” the way down to 10%), flagging “growing uncertainty around the number of cases and fatalities.” In the event mobility is restricted through August, growth could drop to 8.8%, the bank said.
At the same time, private research firm Centre for Monitoring Indian Economy Pvt now says at least seven million people lost jobs in April, pushing the unemployment rate to the highest since December (figure below).
“India’s recovery has been hit by a second COVID wave… that could potentially trigger a pause in [the] economy,” SocGen remarked, in a generally constructive note dated Monday. “Foreign institutional investors pulled out some money last month but inflow from domestic investors helped the Indian equity market remain surprisingly resilient,” the bank added.
Election results from West Bengal found Mamata Banerjee’s Trinamool Congress Party winning nearly three-quarters of state assembly seats. BJP did make some headway, though. “I would like to thank my sisters and brothers of West Bengal who have blessed our party. From a negligible presence earlier, BJP’s presence has significantly increased,” Modi said Monday, promising he would “continue to extend all possible support to the West Bengal Government to fulfill people’s aspirations and also to overcome the COVID-19 pandemic.” Banerjee is India’s only woman chief minister. As The New York Times notes, she “has her own cult of personality and a reputation as a street fighter.”
One author and political analyst in New Delhi told Bloomberg that the “three strongly anti-BJP regional leaders [who] emerged victorious… are likely to be the nucleus of the opposition challenge to Modi in the months ahead as he battles the backlash to his mismanagement of the COVID crisis.”
A political science professor told the Times “the West Bengal results tell us that Modi’s personal, divisive and aggressive campaign in West Bengal backfired.”
If this all sounds familiar to an American audience, that’s because it should.
Over the weekend, Delhi Chief Minister Arvind Kejriwal issued an urgent plea. “Even today, we received SOS calls from hospitals all across Delhi,” he said, adding that,
We have conveyed it to the courts as well as written to the central government that Delhi has a requirement of 976 metric tonnes of oxygen per day. Delhi has been allotted only 490 MT oxygen, but is not even getting that. On Friday, 312 metric tonnes were provided. If only 312 metric tonnes are being provide against 976 metric tonnes needed, how are things supposed to work out?
It was a rhetorical question.
Summing up, Kejriwal said simply: “Delhi needs oxygen.”