COVID second wave’s impact on economy may not be very large: CEA

Chief Economic Adviser K V Subramanian on Thursday said the impact of the second wave of COVID-19 on the Indian economy may not be “very large”. He also said predicting the second wave was a real problem for researchers across the globe. “I do think given the predictions that are being made by many epidemiological researchers that the pandemic (peak) should not extend beyond May, based on that we have done some internal assessments. I think that the impact actually may not be very large (on the economy),” he said.

Speaking at a webinar organised by the Financial Times and The Indian Express, he said “all of us economists actually have to say all these things with enormous dose of humility, because not only in India but in every other country, predicting the pandemic has been extremely difficult.” As far as second wave is concerned, he said there is a lot more knowledge about how to handle it and it is unlikely that India will go into a national lockdown as there have been a lot of learnings from the past. On the long-term prospects for the Indian economy, he said, growth should go back to 7 per cent-plus in a couple of years.

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This year actually will be an exceptional year because of the low base, he added. He also said public sector banks are in a much better shape compared to the past couple of years. “There will be stress that is coming because when the real sector will get impacted because of the first wave and the second wave, but our banks are in a much better shape to handle it and the government remains actually committed behind them as well,” he said.