Only Rapid Vaccination Can Fast-forward and Broadbase Economic Recovery: CRISIL
Moneylife Digital Team 22 June 2021
India's second COVID-19 wave is finally ebbing, with weekly average cases declining to about 60,000. That is still high, but a huge relief nevertheless, when considering that cases had risen to 4.14 lakh just a month back.
However, for India, where economic recovery has been slow, shaky and lopsided, ramping up the vaccination drive to cover a larger proportion of the population seems the only way to usher in speedier and broad-based recovery, says a research note.
In the report, ratings agency CRISIL says, "The government’s target is to fully vaccinate the adult population – or 68% of the total population – by end-2021. However, CRISIL Research estimates only about 70% of the adult population will be vaccinated. So, there is a lot of ground to cover. To be sure, the new vaccination policy kicked off on 21st June with a remarkable surge in jabs to 8.6 million. It is important that this run rate continues for the rest of this year."
"For the government to achieve its target of fully vaccinating the adult population by end-2021, around 1.5 billion more doses will have to be administered. The vaccination rate will have to be speeded up to about 8 million doses per day on average between now and end-December, or thrice the rate seen until last week," it added. 
According to CRISIL, vaccination remains the safest, and the best, bet. "But until then, considerable policy support will be needed to minimise the impact of the ongoing second wave and the possible third wave, on lives as well as livelihoods.
"Besides increasing healthcare infrastructure spend, it is crucial to extend income and employment support to smaller firms, the rural economy, the services sector and the urban poor – the four segments most likely affected by the re-imposition and extension of restrictions. Rising medical expenses alongside dwindling incomes also added to the pain," it pointed out. 
Given the healthcare challenges posed by the fierce second wave of COVID-19 infections and warnings about an impending third wave, restrictions in some form are expected to continue at least till a larger proportion of the population is vaccinated.
Overall, CRISIL says, economic activity will be sluggish till then as contact-based services will only partially recover.
The vaccination rate in India has been worryingly slow due to lack of supplies. From a peak of 3.5 million doses average per day in mid-April, India’s vaccination rate fell to 1.3 million per day in the third week of May, and rebounded to 3.2 million per day in the week ended 20 June 2021. With the new vaccination policy kicking in, 21st June, saw a record 8.6 million jabs. It is important that this run-rate continues for the rest of 2021.
However, according to the ratings agency, speeding up the vaccination rate is a tall order, given the two challenges. 
"Our population is huge and vaccine supplies are running short," CRISIL says, adding, "The supply issue is expected to be sorted by August, when domestic production lines are expected to go full tilt, and large-scale imports begin. But once vaccine supplies and government procurement start increasing, the next big hurdle is deploying them."
While the vaccination drive so far in India has fairly managed the first two, it is the third that the government will have to focus on, to cover maximum ground in minimum time. And in that, vaccine hesitancy could pose a barrier. Resistance to vaccines could rise as the caseloads fall. Or, there could be delays in acceptance of newer vaccines that enter the market, as some studies suggests.
To tackle this, CRISIL says, the government will have to engage in clear communication to create awareness about vaccine safety and side-effects and develop trust in vaccines and, perhaps, also provide incentives. 
In the US, as resistance to vaccines rose, local governments announced several incentives including lotteries, college scholarships for those in the 12-18 age group, savings bonds, and cash payouts to encourage people to get inoculated.
With the daily new COVID cases coming down, states have started relaxing lock-downs—with caution. Also, unlike in 2020, when restrictions were swiftly lifted as cases started to decline, curbs have been prolonged this year with state governments wary. 
The Indian Council of Medical Research (ICMR) recently recommended three conditions before opening the districts like below 5% positivity rate, 70% of vaccination coverage, and mandatory social distancing. 
"If we are indeed on the road to the December vaccination target by a long shot, economic recovery should start in the third quarter, strengthening into the fourth quarter and the first quarter of the next fiscal," CRISIL concludes.
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