Full recovery of Indian economy likely only by Q3FY22: Brickwork

It noted that second wave of the coronavirus pandemic has completely shattered confidence and has put businesses at great risk and uncertainty.

New Delhi: As the second wave of Covid-19 and the resultant lockdowns have severely impacted the livelihoods and the economy, a report by Brickwork Ratings said that in the current situation full recovery of the economy may become feasible only by the third quarter of the ongoing financial year.

It noted that second wave of the coronavirus pandemic has completely shattered confidence and has put businesses at great risk and uncertainty.

Although the declining numbers of new infections provide a glimmer of hope, fast pacing the recovery process is possible only when new infections are contained and a significant proportion of the population is vaccinated, it said.

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“In this situation, full-fledged recovery may become feasible only by the Q3 of the current fiscal,” said the report titled ‘Covid 2.0: Lingering Uncertainty over Economic Recovery’.

It also said that time is opportune for the Centre to announce a clear stimulus package to help the recovery process and build confidence among economic agents.

“Many have voiced the need to increase cash transfers to the affected and vulnerable sections, along with targeted transfers to the urban poor,” it said.

Union Finance Minister Nirmala Sitharaman has already asked the departments and public enterprises to front load their capital expenditures, but in a situation where the virus continues to spread fast and restrictions in various states are still in place, the spending plans can be implemented only in a staggered manner.

Noting that the most important measure needed now is to fast track the pace of vaccination, it, however, added that due to vaccine production capacity constraints, unfortunately, there is considerable confusion on the vaccine policy with even the Supreme Court questioning the government on differential pricing.

The report observed that the Indian Constitution has placed containing contagious diseases on the concurrent list, and the Centre has a predominant responsibility in this.

“Vaccination is a service with enormous externalities, and economic principles dictate that the Centre should bear the entire cost of universal vaccination, although it can use the services of the states and private healthcare facilities to vaccinate people,” it said.

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