The decline in the latest DART reading reflects the impact of COVID restrictions imposed by several state Governments on economic activity. Worryingly, daily confirmed COVID cases have risen nearly threefold over the last week (on a trend basis) led by states of Maharashtra, Delhi and West Bengal. The pace of rise points to the possibility of beginning of the third wave of infections in India. As such, we have seen progressive widening and tightening of curbs over the last few days at the state level, which could weigh on DART reading in coming weeks.
Having said so, experience of other countries offers some hope. While the community transmission of the Omicron variant is much faster (vs. Delta), the accompanying rate of hospitalisation/mortality stands far lower. As such, policy promptness with respect to onset of stringency measures, ramping up of health infrastructure along with progress on vaccinations/booster shots could limit economic spillovers. We formalize our FY22 GDP growth estimate at 9.6% (vs. 10% with mild downside risks earlier).
To get a detailed perspective and outlook, download our report.