Rush by Indian states to reopen seen as risky step

NEW DELHI • The rush by states in India to end lockdowns as new coronavirus infections drop, rather than waiting for vaccination rates to rise, risks triggering fresh restrictions and holding back the nation's recovery, according to Oxford Economics.

"States are easing lockdowns based on lower test positivity rates rather than vaccination progress," Ms Priyanka Kis-hore, head of India and South-east Asia economics at Oxford Economics, wrote in a report to clients. "This risky strategy increases the chances of renewed outbreaks that would further delay the recovery."

Provinces including the national capital New Delhi have begun reopening amid signs of infections plateauing, causing mobility rates to improve as of the middle of this month.

While that is likely to foster the return of some demand in the near term, there is the risk of consumption and business activity suffering should newer restrictions be placed to control a resurgent virus wave.

With only 3.9 per cent of India's population fully vaccinated, Ms Kishore sees economically important states, including Maharashtra and Tamil Nadu, not yet reaching a "safe" level of vaccination.

"The vaccine situation keeps our outlook cautious," said Ms Kishore, who maintained India's growth forecast for this year at 9.1 per cent - a pace slower than the 9.5 per cent predicted by the nation's central bank.

BLOOMBERG