Second Wave of Covid and Partial Lockdown in Maharashtra
| S Kumar Saha, Business Editor, IOP, Mumbai - 15 Apr 2021

Second wave of Covid and partial lockdown in Maharashtra will impact on Indian Economy, recovery- could be dent around Rs. 50, 000 Crore!

BY S. KUMAR

Lockdown curbs put in place in Maharashtra to stem the further surge in COVID-19 cases can dent India's economic growth. Disruption in the country's largest regional economy and most industrialized state can undermine India's overall growth.

Cause & Effect

  • A credit-negative threat to Economic Recovery!
  • Retail and Reaction - activity have dropped in April
  • Migrant laborers fled once again from Maharashtra!
  • Economic growth likely to be 13.5-7% in financial year 22’!

Rating agency Moody’s which retain its forecast of double-digit growth in India’s GDP for FY 22 later in February it had revised India’s growth outlook to 13.7% from 10.8% while maintaining credit rating at negative (Baa3) which is lowest investment grade rating said warning of a threat to recovery. However, targeted containment measures versus last year’s complete lockdown throughout the country and rapid vaccination will soften the hit on the economy.  The agency sees vaccination is the main tool to manage the wave but at the same time warned that it’s shortages could slow inoculation drive. While Japanese brokerage Namura recently tempered its FY 22 growth expectation of Indian Economy to 12.65 from 13.5% on account of disruption cost by 2nd covid wave. To mitigate the situation, the Maharashtra government imposed a lockdown which entails complete shutdown at till 30th April with limited activities. The measures are in place until April 30.  The rising cases and more restrictions in Maharashtra pose a big threat to businesses and the economy at large. But how? According to Care Rating Agency, the loss of economic activity will have a 0.32% impact on the GVA (Gross Value Added) at the national level. It also revised down its national GDP growth estimate to 10.7 - 10.9% from 11 - 11.2% given a week ago.

Looking at the ramifications of the restrictions put in the state, the "radical" lockdown decision taken by the Maharashtra government will have an economic impact of Rs 50,000 crore. Hotels, trade, and transport sectors in the state are going to bear the biggest dent. Out of the projected Rs 137.8 lakh crore of GVA at the country level projected for FY22, Maharashtra would account for around Rs 20.7 lakh crore, which will now decline by around 2% due to the lockdown, the loss of income is based on the relative share of Maharashtra in various sectors, and the almost one-month impact of lockdown/restrictions on them. With FY22 starting on a somber note with the partial lockdown with strict norms fully in place for Maharashtra and to a lesser extent in other states, overall production and consumption would be affected. The dip in output by around Rs 50,000 crore in the case of Maharashtra would lead to a decline in Gross value added (GVA) growth by 0.32% at the overall domestic economic level. Measures adopted by Maharashtra as "radical," the state is the largest in terms of Gross State Domestic Product (GSDP) and has a share of around 15% in GVA, followed by Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka. I need to explain little in details with figures from various sources that Impact on consumer demand and whole country’s economic impact-

   As the movement of people has been curtailed to a large extent, overall consumer demand would also get impacted affecting certain segments in manufacturing, will affect power consumption, and hence the overall production of electricity as well, even the pace of construction will slow down, and new projects will not be taken up. Restrictions on the functioning of non-essential shops are likely to impact the discretionary retail segment, while e-commerce platforms are expected to benefit to a limited extent. Meanwhile, the 'Agriculture & allied activities', 'Industry' and 'Services' sectors for the state are expected to grow by 11.7%, (-)11.3% and (-)9.0% respectively. As per the advance estimates, Maharashtra's economy is expected to grow by (-) 8.0% during 2020-21. Due to the impact of the COVID-19 pandemic on Trade, Repairs, Hotels & Restaurants and Transport sectors, the services sector is expected to grow at (-)9.0%.  The average share of Maharashtra's contribution to India's nominal GDP is the highest among all states at 14.2%, according to the state economic survey for FY21.  As per the advance estimates, nominal (at current prices) GSDP for 2020-21 is expected to be Rs 26,61,629 crore, and real (at constant 2011-12 prices) GSDP is expected to be Rs 19,62,539 crore. Nominal GSDP of Maharashtra is expected to decrease by Rs 1,56,925 crore during 2020-21 as compared to 2019-20. Meanwhile, per capita state income during 2020-21 is expected to be at Rs 1,88,784.

Impact on Real Estate and Gold Market:

Real estate professionals said that the impact of COVID19 is slowing down and residential segment is recovering faster than commercial. Ind-Ra expects double-digit growth in India’s GDP in FY22, albeit on a low base. This is likely to result in a sharp yoyo upswing in rent collection for retail space providers; however, this could still be somewhat below FY20 level in 1HFY22, Market consolidation continued in the favor of grade -I players. While sales have declined overall during the first half of 2020-21, grade-I residential developers witnessed a lower on-year decline in sales of 13%. Pre-sales for the top 10 listed players during the period stood at 12.3 million sq ft. The yellow metal lost sheen as investors shifted out of this safe-haven asset to more lucrative investment options, such as cyclical stocks. Over the past few days, however, the prices have started to climb again. In the last two sessions, the prices have added 2.5 per cent in the spot market as they moved from Rs 43,994 level per 10 grams on March 31 to settle at Rs 45,058 per 10 grams on April 5. The surge, analysts said, was on the back of bargain hunting at lower levels and the fear of renewed lockdowns amid rising Covid cases. Jewelers were expecting good sales during Gudi Padwa as gold prices have fallen to Rs 45,000 per 10 gm from a Rs 51, 000 per 10 gm in the beginning of the year, a drop of almost 12 per cent.

Thackery Government is Sandwich between BJP’s continuous trying to topple it and sensitive local issues; corona is hobnobbing, dancing in between:

BJP’s power hungry is well known, no other political parties throughout the world except some Military cops in different countries did what BJP is doing for last few years, even Vajpayee era was totally different from now. I don’t want to mention here whatever BJP did to snatch power, to make it’s governments in several states with dirty politics and using of government machineries as well money power, every sensitive citizens aware of their activities but if speak about present Maharashtra government from day one it has formed MVA government BJP forgot its own line of political ethics and virtue, greedy of power makes its central and state leaders so much so that they have lost basic sense of humanity as well civilities in most matters in recent past. Its okay, they want to remain in power in the state as well in entire akhand Bharat, in state whatever it is doing to topple the government are not appreciated. From their stand on partial lockdown in the state to ex CP of Mumbai Paramveer Singh versus state government on bomb found in car in front of the house of Industrialist Mukesh Ambani but it is not understood and not appreciated by any sensitive human that why are they BJP led Union Government  is behaving step motherly with some states wherever they are not in power especially they are playing very dirty and inhuman with people of Maharashtra on supplying of Remdisivir injection and Vaccine, the state has been deprived heavily, they are supplying too less against the demand and need of the state but BJP’s leader even those who are from the state to central and local are shedding crocodile tears and blame game is continuing for recent corona surge in the state, making false statement and propagandas to divert and misguiding to people of the state, let whatever people of Maharashtra are citizens of India, they are in main stream with true patriotism, nothing should be done at the cost of human life. At last, but not least I remember late noted Journalist Dilip Padgaonkar’s words ‘Maharashtra mela tari Rashtra mele; Maharashtra bina Rashtra ch gadya na chaale’ (if Maharashtra die entire country will suffer, without Maharashtra the country cannot run smoothly), leaders of entire country irrespective of parties should keep in their mind!

Image - Mumbai Airport during Lockdown Image Source -Twitter @rajtoday

Image - Mumbai Lockdown effect on Gateway of India. Image Source - Twitter @down2dusk_30


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