GD Topic: Coronavirus: Impact of Covid 19 Second Wave in India; Vaccination Policy; Third Wave Predictions

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(Updated on July 06, 2021)

 

After the devastation caused by first wave in 2020, Coronavirus cases rose sharply in April and May 2021 causing the Second Wave. While Government and Industry thought that they had gained control of the situation by January 2021, the second wave found us wanting for basic necessities such as oxygen and medical supplies. It appears that the second wave is on its way out with daily cases coming down from the peaks of 4 lakh cases in April 2021, but we have lost almost 4.0 lakh lives to COVID-19. With the hope that the situation will improve in coming months, a SBI report predicts third wave in August-September, 2021. Given the importance of this GD Topic, MBAUniverse.com presents a complete update on COVID 19. In addition to GD Round, this topic is also appearing in personal interview round for IIMs and MBA Admission Interviews. So, get ready!

 

Cases overview in India as on July 2021
Here is the latest data on Covid 19 cases from India

Confirmed Cases
30,585,229
Deaths
402,728
Doses Administered
352,892,046
People Fully Vaccinated
62,923,284
% of Population Fully Vaccinated
4.60%

Covid 19 is perhaps the biggest challenge that Indian economy has faced since Independence. Let’s understand the impact.

 

Lower GDP Growth
In the wake of Second Wave of Covid 19, many economists and ratings agencies have lowered their FY22 GDP forecast for India in just a matter of months. While India’s March quarter (Q4FY21) GDP growth improved, economists believe that the gains have been eroded by the second wave of the pandemic. In June, the State Bank of India (SBI) slashed the country FY22 growth forecast to 7.9 per cent from the earlier 10.4 per cent.  

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Rise in Unemployment hits Poor Households
Rising unemployment has emerged as the biggest economic concern during the second Covid-19 wave as it has mostly affected the poorer sections of society. Data suggests that the pace of employment increased sharply in May as smaller firms cut jobs at the fast pace. Think tank Centre for Monitoring Indian Economy had confirmed that one crore Indians have lost jobs during the second wave and the numbers are still rising. 

 

Weak Consumer Demand Hits Industry
Lack of demand and poor consumer sentiments during the second wave are factors that will significantly make India’s economic recovery harder. Consumers are not in a mood to spend freely after second wave, given the health and financial emergencies that shocked the households. The combination of slow demand growth and lack of consumer confidence could significantly derail the economy as people are likely to remain hesitant for a longer period before they start spending on discretionary items. 

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Loan Defaults on Rise
This negative impact is evident in the official data on rising loan defaults and cheque bounces. All Banks have reported a rise in loan defaults and cheque bounces during the second wave. It is a clear sign that middle class Indians are struggling to manage debts and liabilities. Cheque bounces rate for loan repayments have doubled to over 20 per cent from the year-ago period while credit card defaults rose to 18 per cent, says a Reuters report. Many banks have indicated that retail loan defaults are likely to rise in the coming months. HDFC Bank’s CEO Sashidhar Jagdishan recently stated during an investor call that the bank may not have a “grip of what is happening for the first time in so many years.”

 

Rural India Hit Hard
The second wave has seen stricter and longer lockdowns in the rural parts of the country too. Most APMC Mandis were closed for operations at the peak of Second Wave. Due to the closure of Mandis, vegetable vendors, and processing industries have also been hit. The average wage growth for the agriculture sector for the period of November 2020 to March 2021 has reduced to 2.9 percent (2nd wave) from 8.5 percent in April to August 2020 (1st wave).

 

Government Takes Steps

 

Government of India has taken many steps to support the Indian economy and industry. Here are the key steps:

  • In March 2020, the Government announced a Rs 1.70 lakh crore-Pradhan Mantri Garib Kalyan Yojana (PMGKP) to protect the poor and vulnerable from the impact of the pandemic.
  • In 2020, the Union government released the 'Aatmanirbhar Bharat' package to boost the economy and the overall stimulus was estimated to be worth around Rs 27.1 lakh crore.
  • Government and the RBI also came out with a series of packages in a phased manner totalling around Rs 30 lakh crore, which is 15 per cent of the national GDP.
  • To boost consumption during the festival season, in October 2020, Government announced measures that were worth close to Rs 73,000 crore to stimulate consumer spending.
  • Aatmanirbhar Bharat Abhiyaan 3.0 unveiled in November 2020, ahead of Diwali, was worth Rs 2.65 lakh crore. Of the total amount, the maximum of Rs 1.45 lakh crore was allocated to give a boost to manufacturing activites.
  • In June 2021, Finance Minister Nirmala Sitharaman announced some fresh relief measures for the economy, the first such package after the second COVID-19 wave, focusing largely on extending loan guarantees and concessional credit for pandemic-hit sectors and investments to ramp up healthcare capacities. The government pegged the total financial implications of the package, which included some changes earlier supports, at ₹6,28,993 crore. Ms. Sitharaman announced an expansion of the existing Emergency Credit Line Guarantee Scheme (ECLGS) by ₹1.5 lakh crore. She also announced a new ₹7,500 crore scheme to guarantee loans upto ₹1.25 lakh to small borrowers through micro-finance institutions.

COVID-19 Vaccination in India
On 16 January 2021 India started its national vaccination programme against the COVID-19 pandemic. The drive initially prioritises healthcare and frontline workers, and then those over the age of 60, and then those over the age of 45 and suffering from certain comorbidities.

 

A new policy for Covid-19 vaccination in India come into effect on June 21. Prime Minister Narendra Modi had said India will shift to centralised procurement of vaccines, after several states faced difficulties in procuring and managing the funding of vaccines. Centre will directly procure 75 per cent of the doses manufactured by vaccine companies, and distribute this among the states, to be administered for free. Private hospitals will have exclusive access to the remaining 25 per cent.  

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Vaccination Data for India and the World as on July 2021
Here is the Covid 19 vaccination data for India and the world.

Location
Doses given
Fully vaccinated
% of population fully vaccinated
India
34.7Cr
34,70,00,000
6.29Cr
6,29,00,000
4.6%
4.6%
China (Mainland)
131Cr
1,31,00,00,000
22.3Cr
22,30,00,000
-
United States
33.1Cr
33,10,00,000
15.7Cr
15,70,00,000
47.9%
47.9%
Brazil
10.5Cr
10,50,00,000
2.76Cr
2,76,00,000
13.1%
13.1%
United Kingdom
7.89Cr
7,89,00,000
3.36Cr
3,36,00,000
50.4%
50.4%
Germany
7.73Cr
7,73,00,000
3.24Cr
3,24,00,000
39.0%
39.0%
France
5.45Cr
5,45,00,000
2.11Cr
2,11,00,000
31.4%
31.4%
Italy
5.36Cr
5,36,00,000
2.01Cr
2,01,00,000
33.3%
33.3%
Turkey
5.32Cr
5,32,00,000
1.58Cr
1,58,00,000
19.2%
19.2%
Japan
4.91Cr
4,91,00,000
1.75Cr
1,75,00,000
13.9%
13.9%

India's Third Covid-19 Wave from August, Peak in September: SBI

Unfortunately, it looks like that Coronavirus pandemic is not over yet. India is expected to see the Third Wave of the Coronavirus Pandemic from August 2021 and it would reach its peak in September, a report by the State Bank of India (SBI) has projected. "Going by the current data, India can experience daily Covid-19 cases around 10,000 somewhere around the second week of July. However, the cases can start rising by the second fortnight of August," the SBI report said. An SBI report, published in June, said a possible second wave could be "as severe as second," though it also said the number of coronavirus related fatalities would be less than the corresponding figures due to the second wave. 

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COVID 19 – India to emerge stronger
While there is a short-term negative impact on India, economists are of the opinion that the disruption caused by the virus in China could pave way for more long term foreign investments in emerging economies like India as the world looks to reduce dependency on China, the largest manufacturing hub in the world. Experts feel that India has a good chance of becoming an attractive manufacturing hub given the present situation, provided the government changes some of its trade policies to bring down commodity prices. An example of Vietnam, which has gained a huge growth boost due to higher density of electronics manufacturing, is before everyone.

 

According to the Chief Economic Advisor of India, Krishnamurthy Subramanian the coronavirus outbreak in China provides an opportunity for India to expand exports. India is one of China's leading trade partners in Asia and has a huge trade deficit with that country. Sharing his views at IIM Calcutta, Subramanian said, “The coronavirus outbreak in China provides a good opportunity to India to expand trade and follow an export-driven model."  He said that China imports a lot of components, parts, assembles and integrates and then exports them. "India has been following the same pattern in terms of mobile manufacturing in the country. So, if one looks from this perspective, it provides a good opportunity for India." said Subramanian
 

Several reforms passed by Parliament since the pandemic set in, could lift medium-term growth prospects, including the Agricultural Reforms to give farmers more flexibility over where to sell their produce, it said. Stripping out middlemen, as the reform allows, could improve farmer incomes while reducing consumer prices.

 

Parliament has also passed Labour Reforms. Their intent, among other things, is to improve worker access to social security notably in the large unorganised sector, strengthen occupational safety requirements, speed up the resolution of labour disputes and ease migrant workers' ability to move between states. In addition, employers will now only need prior state government approval for redundancies if they have over 300 workers, up from 100 previously, and state governments may raise this threshold. "These changes could support formalisation of India's labour market and improve its flexibility, with positive efficiency gains, but our assumption is that in practice their impact will be modest," experts added.

 

The government also intends to privatise some state-owned enterprises, of which more than 200 are owned by the central government and 800 by state governments. A wide-ranging privatisation push could be transformative, it said. Fitch said the process of reforms in India remains especially complex and implementation at times has proven difficult.  

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COVID 19 Impact on MBA Education  
Global higher education including MBA education is also affected as even the top MBA colleges of the world like Harvard, Chicago Booth, Wharton, Stanford, Kellogg, MIT Sloan and hundreds of others have decided to move to online teaching instead of class room teaching. Besides, the B-schools have extended their spring break, have stopped international exchange programs, have cancelled the events like convocation, have restricted international travel and have taken other measures to restrict the movement of students and faculty. In India also, B-schools have postponed their Convocations, delayed admission process and session commencements, and are conducting awareness programs for Corona virus.

 

Leading institutions such as IIM-Ahmedabad, IIM-Kozhikode, IIM-Indore, IIM-Trichy, Bhavan’s SP Jain Institute of Management & Research (SPJIMR), IIT-Bombay, IIT-Kanpur have introduced measures including postponing of events and large gatherings, imposing travel restrictions and holding extensive awareness generation sessions on campus about the outbreak.
 

In 2021, things were coming back to normal at B-schools, but the second wave has put spanner in the works. MBA Admissions and Placements have been impacted negatively.

 

However, Universities and B-schools are expected to reap long-term benefit as they have embraced online teaching, and many other digital technologies in domains like admissions and student management, which will make them more competitive. 

 

India must be careful of third wave of COVID 19, and take necessary precautions to come out stronger from this crisis. . . Read More GD Topics

 

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