Yes Bank revised India’s growth estimate from previous projection of 10.5 per cent to 8.5 per cent for the financial year 2021-22.

The mobility and consumption indicators have already started recording a sequential drop with state-level lockdown restrictions through April and May.

“While all indications pointed to a stable recovery process before the 2nd wave struck, this is now likely to be pushed back to an extent. For FY22, we expect real GDP growth at 8.5 per cent, weaker than our previous estimate of 10.5 per cent,” said the report titled ‘India GDP: Marathon effort ahead’ prepared by Yes Bank’s Economist department.

It noted that the implementation of lockdown-like restrictions due to the second wave is likely to create a break in the normalisation process in the growth that had started as the economy was unlocked after the tapering off of the first round of infections.

Other high frequency indicators such as automobile sales and production, PMI manufacturing and PMI services, E-way bills, power consumption etc, have also moderated sequentially.

“While the recent decline in the number of daily Covid cases has been encouraging, states are expected to remain cautious and likely to extend lockdown restrictions until at least mid/end June, thereby further deferring consumption recovery,” it said.

Speedy vaccination of the population is probably the only way that might enable a bounce back in consumer sentiments.

“We remain hopeful that starting June, supplies will turn out to be better with domestic production as well as imports of vaccines being ramped up. Overall, we expect GDP growth in FY22 to be at 8.5 per cent with risks balanced on either sides,” it said.