![]() This has meant higher cost of procuring raw materials for both small and large industries. In addition, the global and local supply chains had also not fully normalized after the first wave. The fear of prolonged lockdowns led to migration back to villages. ![]() Non-essentials manufacturing was hit for longer and with more severe restrictions. To control the coronavirus spread, most of the manufacturing sector had to work at a lesser capacity or shut down. Manufacturing was at the receiving end in both the first and the second wave. The average wage growth for the agriculture sector for the period of November 2020 to March 2021 has reduced to 2.9 percent (2nd wave) from 8.5 percent in April to August 2020 (1st wave). We can see the contrasting impact of the first and the second wave in the agriculture wage growth data. Due to the closure of Mandis, vegetable vendors, and processing industries have also been hit. As the Mandis have still not opened fully, crops are rotting in the fields. Farmers were not prepared for the ensuing chaos. Specifically, APMC Mandis in Gujarat, Rajasthan and Maharashtra were closed during the peak harvesting season. Due to the lockdowns, APMC Mandis have been closed for operations or have taken such steps voluntarily. The second wave has seen stricter and longer lockdowns in the rural parts of the country. The situation was further aggravated, due to the inadequacy of medical infrastructure in the rural areas and the rush of patients from villages and smaller towns to urban centers. Rural areas in the state of Maharashtra, Andhra Pradesh and Kerala were the worst impacted. An analysis of more than 50 most severely hit districts, 26 were in rural areas. ![]() In the second wave rural areas started reporting more cases than urban ones from the second month itself. Urban areas reported more cases than rural areas for the first five months of the spread. The first wave was primarily urban in its spread. Reflecting on the GDP figures, our agricultural economy grew by 3.4% while the overall economy contracted with 7.7% in FY21. Agriculture further benefited from good monsoon and cheaper and higher availability of labor. As a result, agriculture, which is the primary driver of our rural economy providing employment to 58% of our population, continued to grow. ![]() Manufacturing and the urban economy had come to a grinding halt while the rural economy continued to move because of less strict lockdowns. In the first wave, we went through a prolonged national lockdown and a significantly lower number of peak cases. ![]() To understand the economic impact of the second wave, let’s remind ourselves of the first wave and its impact on the economy. This spread journey makes a national lockdown economically suboptimal. The second wave started in the west with Maharashtra, went up North and now is peaking in the south of the country. I attribute this to the economic compulsions of the hard-hit central government and progressive spread of the virus. The response to the second wave has been localised and driven by the states while in the first wave we went for a national lockdown. Global changes are operating on many new areas of conflict and cooperation for India and we can achieve a new level of integration of Indian economy with world markets on the basis of protection of our own national interest.The government’s approach in dealing with the two waves has been different. It will be a mistake to assume that India can evaluate an effective machinism for economic reforms and it will be difficult for India to adopt with global changes without dealing with domestic problems like control of terrorism, providing employment to rural educated people, and work for the rural poor, empowering women and marginalised people and providing reasonable price and market facilities for the farmers. Economic polices formulated and executed by the government, have also played an important role in determination of levels of income, savings, investments and employment in the society. Economic polices have a direct impact in shaping the structural framework of economy. Indian Society is drastically changing after globalisation and urbanisation has brought a lot of changes in the Indian culture. ![]()
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