The Omicron variant of Coronavirus will hit the GDP for March quarter of 2021-22 by 0.40 per cent and slice off 0.10 per cent from the overall growth of the current fiscal, as many states resort to restrictions to limit infections, India Ratings and Research said in a note.
“Curbs in various forms such as reducing the capacity of market and market complexes and night and weekend curfews to check human mobility/contact have already started in several states, which are impacting economic activities,” the agency said.
The surge in cases seen over the last fortnight will have an adverse impact on the fourth-quarter GDP and the growth will come at 5.7 per cent during the quarter, which is 0.40 per cent lower than the earlier estimate of 6.1 per cent. For the entire 2021-22, the GDP is expected to clock a growth rate of 9.3 per cent, 0.10 per cent lower than what was estimated earlier, it noted further.
The revision in estimates comes amid a massive surge in Coronavirus infections across the country, especially in the metro. A majority of the new cases are suspected to be that of the Omicron variant of the coronavirus, which is suspected to be spreading fast and also evades prior vaccinations.
Indications so far suggest that the infections are milder and mostly not life-threatening, the rating agency said, adding that the curbs imposed by local governments will be less disruptive than those during the first two waves of Coronavirus.
Both government and businesses are more equipped to deal with the situation and be more resilient, it said, expecting the impact of COVID 3.0 to be lower than COVID 1.0 and 2.0, it noted.
The economy will bounce back pretty quickly once the third wave subsides, as per the report.
Policy support – both monetary and fiscal – would be “critical” till the threat of pandemic continues and the economy reaches the stage of a sustained growth trajectory, it added.