India struggling to counter economic mess

India is struggling to counter the economic fallout of the second COVID-19 wave by rolling out a slew of fresh measures.

The second wave hit the country in April-May when the daily new cases rose to over 400,000 and daily death toll over 4,000.

The second wave adversely affected India's economic parameters including the overall unemployment, food inflation and oil prices, as the Asia's third largest economy was slowly coming back on track after the first wave struck the country in February 2020.

GROWTH FORECAST

Global credit rating agency Moody's last week cut down India's growth forecast for 2021 to 9.6 percent from the earlier projection of 13.9 percent, after the second COVID-19 wave battered the country's economy in April-May this year.

In one of its latest reports, Moody's said that faster vaccination would be paramount in restricting economic losses in the April-June quarter.

With states now easing restrictions, economic activity in May is likely to signify the trough, said the report.

UNEMPLOYMENT

Most of the country's manufacturing activities were suspended amid lockdown imposed by almost all states amid the second COVID-19 wave, leading to large-scale unemployment.

According to data of the Center for Monitoring Indian Economy, the urban unemployment rate dropped to 9.7 percent in the week ended June 13, against a monthly unemployment rate of 14.7 percent in May.

The rate of unemployment improved as falling coronavirus infections led to lockdown relaxations and monsoon rains cover some parts of the country.

After the second COVID-19 wave, temporary formal workers had to contend with job losses, English daily Hindustan Times quoted Arup Mitra, professor of economics at Delhi University, as saying.

"What is happening right now is these categories of workers have either gone back to rural homes or have withdrawn from the labour market due to lack of decent opportunities," he said.

RISING OIL PRICES

Prices of fuels, including diesel and petrol, have been on the rise during the past several months, with petrol being sold above the mark of 100 Indian Rupees (1.34 U.S. dollars) per litre at some places.

The rise in fuels prices also resulted in food inflation as transport of fruits, vegetables and other essential food items is largely dependent on trucks and large containers running on diesel.

During the past months, prices of essential food items such as edible oil, pulses and vegetables have been on the rise, causing pressure on households' daily budgets. Food inflation accelerated to 5.01 percent in May, compared with 1.96 percent in April.

India's federal government on Monday announced a total of 17 measures worth 6.28 trillion Indian Rupees (around 84.7 billion dollars) to prepare the health systems for emergency response and provide impetus for growth and employment.

The measures fall into three broad categories providing economic relief, strengthening public health, and giving impetus for growth and employment.

As many as eight out of the 17 schemes aim to provide economic relief to people and businesses affected by the COVID-19 pandemic, with special focus on health and reviving travel and tourism sectors, said an official statement issued by the federal government.