A midsummer nightmare: Act two

An irrational exuberance cloaked a flagging economy; a devastating second wave has exposed it

- K.SUNIL THOMAS

AT AN EARLY-APRIL briefing addressing the surge in coronavirus infections in India, Reserve Bank governor Shaktikanta Das took refuge in an unlikely source of economic wisdom. Rather than quoting the likes of Adam Smith or John Maynard Keynes, he chose American civil rights activist Martin Luther King Jr: “We must accept finite disappointment, but never lose infinite hope.”

As the second wave of Covid-19 brought India’s health care system to its knees, the worry increasingly is on how much pain the next target in line, the economy, can bear. Hope may be infinite, but stark reality is harshly finite for thousands of small and medium businesses already bleeding from the first round of spikes last year.

In fact, indications are emerging that the economy had already slowed down before the second wave hit with brute force, despite all the pep talk of V-shaped trajectories, festive booms and ‘better than pre-Covid level’ growth claims. “Those were just green shoots of recovery. The real economy has not grown at this point of time,” said Sethurathnam Ravi, economist and former chairman of Bombay Stock Exchange. “If you look at the last two and a half years, we were not doing well, our growth rate was low [before] we got into a negative growth [after last year’s lockdown]. Manufacturing output hasn’t come anywhere near its earlier peak. We are not anywhere in a growing zone.”