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What a billion covid shots mean for the Indian economy

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With India having met the timelines that it had set for administering over one billion covid-19 vaccines, it is important to explore its potential impact on the country’s economic prospects. Mint explains the impact on consumption and the supply-chain

With India having met the timelines that it had set for administering over one billion covid-19 vaccines, it is important to explore its potential impact on the country’s economic prospects. Mint explains the impact on consumption and the supply-chain

What is India’s achievement?

On 21 October, the country administered over one billion covid-19 vaccine doses in about nine months. Due to limited production capacity, the vaccination programme started with a selective approach—covid warriors and front-line workers, to begin with, followed by senior citizens, and then the 18-plus adult population. It has since traversed a long path, with the credibility of scientists and the ability of the government being initially questioned. India is now the second country to achieve one billion doses globally after China. Both nations have billion-plus populations.

How will it help the demand side?

With over 75% of adults administered at least one dose and 30% fully vaccinated, people have begun venturing out, thereby driving up business for restaurants, shopping centres, marketplaces etc. There could be a dramatic shift back to offline shopping, resulting in a new normal—i.e. a mix between offline and online for retail. The synergy between entertainment, bonding in the family, and the satisfaction of being in touch with the outside world may result in discretionary spending. Families may end up buying more than what was planned.

Vaccination landmark
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Vaccination landmark

Anything more in the vaccination pipeline?

The focus of the government and health administrators now is on vaccination of children between 2-18 years of age. Zydus Cadila’s Zycov-D and Bharat Biotech’s Covaxin are being considered for this younger age group. It could change the momentum in every walk of life—family, workplace, and markets—and instil confidence.

What’s the likely effect on the supply-chain?

With pent-up demand picking up, manufacturers will try to meet market expectations. This will drive up capacity utilization. With the government aiming to fully vaccinate its adult population, social distancing norms are likely to be liberalized. Factories will thereby be able to increase production levels. With investor-friendly policies lined up, there should not be any supply-chain constraints, going ahead—except perhaps stress from rising global commodity prices and semiconductor shortages.

Will it boost the nation’s confidence?

Key macroeconomic indicators are fast moving into green resulting in growth estimates for the economy being revised upwards. More than a pick-up in consumption demand and matching investment levels by industry, the lively pace of vaccination will act as a booster for the confidence of the nation as a whole. Policy makers are likely to announce additional reform measures, which may inspire confidence in both domestic and foreign investors.

Jagadish Shettigar and Pooja Misra are faculty members at BIMTECH

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