The second wave of the pandemic has hit India with a devastating impact.
With more 300. 000 cases and 3. 000 deaths per day right now, already accumulates more than 218. 000 deceased in total. It should also be noted that the statistics for India are significantly underestimated.
The virulence of the second wave seems to be linked to several factors: a government complacency marked by poor collection of figures and a denial of their reality, a new variant with a large rising curve and the celebration of massive political and religious events without regulation .
It is clear that there is now a humanitarian crisis of significant proportions.
In India there are 1. 400 millions of people, one sixth of the world’s population. Here are some of the ways it will affect the world economy as well.
1. Lost year for India?
India is the fifth largest economy in the world and contributes significantly to world growth. It has relatively high growth rates (between 4% and 8%) and a large territorial extension.
Even at the beginning of 2020, before the pandemic hit, the IMF had cited the indifference of the production in India as the main reason for the low figures of world growth in 2018 Y 2019.
The IMF lowered its forecast for 2020 to 5 , 8% partly because I expected more of the same on the subcontinent. Now it seems that world growth for 2020 fell by around 4%, while India fell by 10%.
Everyone has been waiting for a big bounce in 2021 from India and the world, but now it seems seriously unlikely.
For example, Sonal Varma, chief economist at the Nomura investment group in India, predicts that India’s GDP will contract by 1.5% in this quarter of the year.
Considering the significant difficulties with the pandemic also in Brazil and South Africa, we can expect the impact on world growth to be considerable.
two. International restrictions
In terms of collateral effects, the scale of the crisis in India is likely to delay international restrictions more than anticipated.
In the words of Soumya Swaminathan, chief scientist of the World Health Organization (WHO): “The virus does not respect borders, nationalities, age, sex or religion.” As some have rhetorically wondered, can a country of this size be isolated?
On a recent trip from New Delhi to Hong Kong, for example, 52 passengers tested positive for coronavirus . The Indian variant has already been detected in other parts of the world. In India, the second wave of the virus has also been caused by the British variant.
Preventing this spread from India requires strict quarantines and travel restrictions. This is bad news for airlines, airports, and businesses. That would also have a damaging effect on world growth.
3. Pharmaceutical problems
The pharmaceutical industry in India is the third largest in the world in terms of volume and the eleventh largest in terms value. It contributes to 3.5% of the total of medicines exported globally and around the 20% of exports of generic drugs.
If these exports are compromised, there will be all kinds of consequences for medical care around the world.
In the current situation, India produces around 70% from vaccines of the world.
The Serum Institute of India (SII) received the rights to produce the AstraZeneca vaccine for 64 low-income countries in the WHO Covax program, as well like 5 million doses destined for the UK, for example.
The crisis in India has already meant that these vaccine exports have been postponed or canceled , leaving many countries vulnerable to new waves of the virus and likely delaying their efforts to get back to normal.
If India cannot provide vaccine supplies to the rest of the world, we can expect effects secondary costs in the form of recurrent blockages, a greater need for social distancing measures and a significant decrease in economic activity.
4. Services not provided
India provides administrative staff for many activities in Western Europe and the US, especially in the financial and health sectors.
With these services now in jeopardy, the US Chamber of Commerce, for example, is concerned that the Indian economy could create “ a drag on the global economy “.
In the UK, another example, trade ties with India are especially important after Brexit. This is demonstrated by the two attempts to visit Prime Minister Boris Johnson in 2021, both canceled at the last minute due to the pandemic.
Given all these problems and the unfolding humanitarian crisis, it has become imperative for the world to act quickly to help India .
Although with short delays, this aid is arriving. The UK sent oxygen concentrators and ventilators. The US sent raw materials for vaccines, drugs, rapid tests and ventilators. And Germany moved medical aid and oxygen.
All that is provided is probably a drop in the ocean of India’s requirements, but at the less shows an acknowledgment that we are in this together.
The Indian government may have been ineffective in the current crisis, but not recognizing how it will affect the world would amount to an equivalent level of complacency.
If the major powers do not do everything possible to help, the crisis of I ndia will turn into a crisis in a short time , not only for health but also for the economy.
Uma S Kambhampati is a professor of economics at the University of Reading in the United Kingdom.
This article was published in English on The Conversation. Click here to read the original.
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