India's lockdown strictest; economic impact to be deeper than other countries: Jefferies

US investment bank Jefferies Group, in a recent report, has said India's lockdown has been the strictest in the world and that its impact on the economy would be deeper. The report says the economic compulsion has driven lockdown relaxation in the fourth phase, even though the COVID-19 spread is worsening due to multiple factors, including migrant movement and lack of medical infrastructure in big cities. "Around 4 million-migrant labour going back to villages recently has not only driven selective labour shortage but also raised COVID-19 risks," the Jefferies' report said.

It said the economic engine has restarted after around two months, which is visible in numbers. The current US-China tension could also play in India's favour, believed Jefferies. "The 2018's experience shows that India outperforms when US-China tensions rise. We, however, remain cautious on India's economic recovery prospects vs the globe."

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The report said India's daily COVID-19 cases were still rising, and that the possibility of a second wave was a concern. "Despite following strict lockdown since late March, India's number of COVID-19 cases is still rising and now at around 7,000 daily, likely as testing has risen to 1.15 lakh per day," it added.

It says India's "detection rates have also climbed lately and the doubling rate has plateaued at ~13-day level. Medical infra is now getting stretched in certain cities, with hospitals at 100 per cent plus capacity utilisation in Mumbai".

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Over 70 per cent of cases is being reported from selected clusters. "Cases concentrated, but migration worsens national trend. 75 per cent of total and 80 per cent of active COVID-19 cases are concentrated in five states," the report said, adding lockdown relaxations and re-start of long-distance travel raise concerns.

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Notably, India allowed the substantial business activity to function in the fourth phase of lockdown. "Since 18th May, substantial opening-up has been allowed. All e-Commerce activity is now permitted and most establishments (barring malls, restaurants, hotels, schools etc.) can now open," it said.

The report mentions India's economic parameters are gradually improving. "Electricity consumption post 4th May is -16% YoY, vs 24% decline earlier. Petrol and diesel consumption in 1st half of May is down 47%/35%, vs the 60/56% decline in April. Customs duty collections (-31% MTD vs -49% in April) and e-way bill generations (double April rate) also indicate higher activity," states the report.

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Edited by Manoj Sharma