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Finance minister Nirmala Sitharaman has said that South Asian countries, including India, must calibrate their responses to protect the vulnerable as uncertainty looms large because of the second wave of coronavirus pandemic, though the region is showing signs of recovery. This is the first statement Sitharaman has made on the economic fallout of the second wave of coronavirus at the spring meetings of the International Monetary Fund (IMF) and World Bank last week.

“We are again witnessing a disturbing increase in cases across the world. New mutations, some reportedly more infectious than the original virus, are spreading in many countries," Sitharaman said at the 103rd meeting of the development committee of the World Bank on 9 April, where she represented India, Bangladesh, Bhutan and Sri Lanka.

“Our economies are also showing signs of recovery, even as uncertainty looms large due to the fresh wave of covid-19 cases. We must calibrate our responses to protect both our vulnerable populations and economies while taking all requisite public health precautions to stop the further spread of infections," she said.

However, Sitharaman hoped that the second wave will be short-lived as vaccination gains pace. “As the vaccination drive continuously gains speed in India, the second wave of covid-19 in India is expected to be short-lived. India is on the path to achieve the vaccination target of 300 million people in the next few months," she said at the 43rd meeting of the International Monetary and Financial Committee (IMFC) on 8 April.

The finance ministry had released brief statements about Sitharaman’s speech last week, but Mint has reviewed her full speeches at the Fund-Bank meeting.

India has registered more than 100,000 daily covid cases consecutively for the past five days with around half of the caseload coming from Maharashtra. Many states, including Maharashtra, Delhi, Chhattisgarh, Karnataka and Punjab, have imposed night curfews, partial lockdowns and a reduction in working hours to limit the spread of the virus. Economists believe contact-intensive services may be the first casualty of the second wave of the pandemic. In March, both manufacturing and services PMI declined, showing early signs of the surge in infections.

“The government of India in association with states and Union territories is working on a five-fold strategy to curb the tide of new cases in most affected districts through exponential increase in testing, effective isolation and contact tracing of those infected, reinvigoration of public and private healthcare resources, ensuring of covid-appropriate behaviour and targeted approach to vaccination," Sitharaman said.

The IMF on Tuesday upgraded its FY22 growth projection for India to 12.5% from 11.5% estimated in January, but cautioned that the forecast hasn’t factored in the severe downside risks arising from the ongoing second wave.

The Reserve Bank of India (RBI) on Wednesday cautioned of uncertainties clouding its growth outlook with the recent surge in covid cases sweeping the country, even as it retained the country’s gross domestic product growth projection for FY22 at 10.5%.

“The recent surge in infections has, however, imparted greater uncertainty to the outlook and needs to be closely watched, especially as localized and regional lockdowns could dampen the recent improvement in demand conditions and delay the return of normalcy," RBI governor Shaktikanta Das had said. The MPC has decided to keep its policy accommodative to support and nurture the recovery, he added.

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