India’s Local Lockdowns Trigger a Sharp Slowdown in Mobility

Summary

• Mobility declines as India imposes increasing restrictions to curb the escalating COVID crisis.
• India’s reported deaths look oddly low given countries with similar case numbers (per 100k are reporting double on average.
• The pace of vaccine rollout also dropped in recent weeks.
• Even without a second nationwide lockdown, India’s economic recovery faces mounting downside risks.

Six consecutive days of above 300,000 new COVID cases are taking their toll. On Sunday, Delhi extended its six-day lockdown for another week, and Karnataka, India’s fourth-largest state based on GDP, announced a two-week lockdown on Monday. Many other states have also imposed increasingly stringent restrictions. The Oxford Stringency index is back up at 70 as of 12 April versus 100 during the peak a year ago. Updated data are bound to show this rising even further.

India’s Vaccine Pace Falls, Death Rate Oddly Low

India’s death rate increased in the past week but remains low at 0.2 deaths per 100,000 people. This is possibly down to demographics, but that the figure is lower than France and roughly equal to Austria is still surprising. By comparison, Hungary, which has the world’s highest COVID death rate, is at 2.12 per 100,000. Yet both India and Hungary are recording very similar new daily case numbers at 24 per 100,000 and 25 per 100,000 respectively. Anecdotal evidence also suggests activity at crematoriums is much higher than the numbers of deaths reported by hospitals.

Looking across all countries where new daily cases have reached 24-26 cases per 100,000 and where cases were increasing (160 such occasions), the death rate, on average, is double that in India.

And despite India’s status as the world’s largest vaccine manufacturer, the vaccination pace has fallen. Last week saw just over 2mn vaccines administered each day. This number was closer to 3.4mn in the week prior and peaked at 3.8mn earlier this month. Another anomaly in the falling vaccination pace is that India is one of the few countries where private hospitals are permitted to administer vaccines for a fee. From 1 May, all adults (18+) will be eligible to receive the vaccine, but this could have limited impact should supply shortages persist or logistical hurdles prevent a faster vaccination pace.

Mobility Is Falling Sharply

Mobility data unsurprisingly show activity slowing in key states. Google data show activity in components such as retail & recreation and transit stations back at levels last seen in August. And with restrictions increasing in recent days, this is set to fall further. Last year’s lows in economic activity are unlikely to repeat, however, with the service sector more equipped to work remotely and large-scale factory shutdowns unlikely. Prime Minister Narendra Modi said a repeat of last year’s nationwide lockdown will be a last resort. But even without it, India’s recovery looks increasingly under threat. And already-high levels of public debt complicate the potential fiscal response.

The IMF’s latest WEO projects 12.5% GDP growth for India this year, by far the fastest for any major economy. But India’s ability to achieve such double-digit growth this year is increasingly unlikely. And with a 7% share of the global economy (PPP basis), this leaves downside risks for global growth.