More than a million people could be dead from COVID in India by the end of July if the current trajectory persists, a University of Washington model showed. Another projection suggested the death toll could exceed 400,000 by mid-June.
India’s deepening crisis has rekindled market concerns that the worst of the pandemic may not be behind us, or at least not in the global context.
This week, the country’s delegation to a G7 foreign ministers’ meeting in London decided to self-isolate after a pair of positive tests. It marked an inauspicious start to in-person gatherings of world leaders. The event was held in preparation for the marquee G7 summit in June.
While there’s a sense in which documenting the official numbers is an exercise in futility given the reported magnitude of the undercounting, to not report the numbers feels like ignoring the crisis. On WHO’s figures, daily deaths are near 4,000 (figure below).
A top adviser to the government warned Wednesday that another wave is a virtual certainty. “Phase 3 is inevitable, given the high levels of circulating virus,” he said, during a press conference. Although he couldn’t put a date on it, he cautioned the country to “prepare for new waves.”
As I hope I’ve made clear over the past three weeks, this situation is extraordinarily serious. The scope of the unfolding humanitarian crisis is stunning, and is likely to get worse in the weeks ahead as deaths mount from infections recorded over the last 14 to 21 days. “It could honestly get a lot worse, which is hard to imagine given how staggering the impacts have already been when you see 400,000 new cases each day and you know that that’s probably an underestimation,” Jennifer Nuzzo, a senior scholar at Johns Hopkins told Bloomberg Wednesdsay.
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The test positivity rate is north of 40% in some regions. Take a minute to ponder that, if you can process it. India has 1.4 billion people.
In addition to the untold human suffering, the crisis imperils India’s economy and could eventually have serious ramifications for the global recovery. “Just a few weeks ago, the outlook for India’s economy looked bright,” Mitul Kotecha, TD’s Chief EM Asia and Europe Strategist wrote Tuesday, on the way to underscoring just how quickly the situation deteriorated,
The talk was all about the rapid pace of recovery while India’s COVID trajectory was showing marked improvement and the country was being lauded for its ability to contain the virus. Many were even suggesting that India was a prime example of how herd immunity can work as the five-day average of COVID cases dropped to below 10k by mid-February. Accompanying this were upward revisions to India’s growth forecasts and growing optimism in Indian markets. Then it all changed.
Yes, “then it all changed.”
On February 5, the seven-day moving average for new COVID infections in India was around 11,800. Three months later, it stands at 382,000.
Again, I’d note that the numbers are almost surely understated. If that’s the second wave, and it doesn’t even capture the real scope of the problem, one struggles to conceive of the devastation a prospective third wave could bring.
Following the decision by the Indian delegation to self-isolate, Boris Johnson was asked if he’d made a mistake by convening an in-person prequel to the G7. “I think it’s very important to try to continue as much business as you can as a government,” he remarked.
It’s not clear that the world (let alone financial analysts based in developed nations) appreciate the gravity of what’s going on. A mutated strain of a highly contagious, deadly virus is spreading unchecked in a country of 1.4 billion people. Folks are dying in droves. They’re burning bodies in piles. The system isn’t collapsing. It’s collapsed.
Earlier this week, celebrated author Arundhati Roy penned an open letter to Modi. “We need a government. Desperately. And we don’t have one,” she said, adding that,
We are running out of air. We are dying. We don’t have systems in place to know what to do with help even when it’s on hand.
What can be done? Right here, right now?
We cannot wait till 2024. Never would people like myself have imagined the day would come when we would find ourselves appealing to Prime Minister Narendra Modi for anything. Personally, I would rather have gone to prison than do that. But today, as we die in our homes, on the streets, in hospital car parks, in big cities, in small towns, in villages and forests and fields – I, an ordinary private citizen, am swallowing my pride to join millions of my fellow citizens in saying please sir, please, step aside. At least for now. I beseech you, step down.
Problem? What problem? Take a gander at how well the Indian stocks that I watch with US ADRs traded today. EPI, IBN, HBN and GLIN. All higher. The only issue was by how much.
I apologize for keeping pointing this out. Yeah, I know that stocks supposedly discount all bad news and trade based on “investors” future expectations. Right. There must be zero doubt that bad loan write-downs at Indian banks will plunge once the epidemic there passes. That’s really logical, right?
Connecting the dots, I’m starting to believe that there is a scary backstory that some big funds are acting on.
…In the last few years, gross NPAs of banks (as a percentage of total loans) have increased from 2.3% of total loans in 2008 to 9.3% in 2017 (Figure 1). This indicates that an increasing proportion of a bank’s assets have ceased to generate income for the bank, lowering the bank’s profitability and its ability to grant further credit…..
https://www.prsindia.org/content/examining-rise-non-performing-assets-india
Before covid was even a thing.
A small, but important, point here is the degree to which micro and small loans play a key role in the Indian economy. While individually small, such loans are inefficient to process. If they go bad the principal will just be lost because no one can afford to pursue payment. Taken as a class these small loans may well prove to be a lurking disaster.