Third COVID wave undoes gains of business resumption achieved last year: Report

The fast-spreading third wave of COVID-19 has undone the gains achieved due to resumption of business since the end of the lethal second wave last year, a Japanese brokerage said on Monday.

The Nomura India Business Resumption Index, which compares activity against the pre-pandemic levels of March 2020, fell to 102.9 for the week ended January 16 as against 107.9 in the previous week.

The index has fallen by 17.4 percentage points (pp) since the third wave struck at the cusp of the new year.

The third wave -- which has seen daily infections climb to over 2.5 lakh from 1.70 lakh in the week ago -- has 'undone business resumption gains since the second wave', Nomura said.

It can be noted that already, economists are estimating a dent of up to 0.40 per cent to the GDP because of the third wave, wherein an increasing number of states have resorted to restrictions on movements to contain the spread of infections.

The Omicron variant is said to be less potent as compared to the earlier Delta variant. For the week under review, the Japanese brokerage said there has been an inevitable drop in mobility, with the Apple driving index down 14.4pp, Google retail and recreation mobility 11.1pp lower, and workplace mobility down 1pp from the previous week.

The labour participation rate fell further to a nine-week low of 39.7 per cent from 40 per cent in the prior week, it said, adding that power demand contracted by 0.4 per cent as compared to the previous week, after a 2.1 per cent fall in the week before.

Air traffic is down by a fourth and railway revenues were down 41 per cent, it said, acknowledging that the freight revenues are stable which indicates a divergent impact between contact intensive sectors and the goods economy.