India is experiencing a third wave of Covid infections — while its overall impact is expected to be less disruptive than previous waves, some economists are predicting slower growth in the near term.

Citi economists Samiran Chkraborty & Baqar M Ziaidi stated in a January 9 note that the economic effects of this new wave may be less in the first three month of 2022.

However, they noted that India’s momentum in economic activity fell short of expectations between October-December and even before the third wave.

The Citi economists revised their India inflation-adjusted GDP estimates in fiscal 2022. Chakraborty said that growth will fall 80 basis points, from 9.8% to 9% year-on–year. The main reason for this is weaker October-December quarter economic activity.

Accordingly, their fiscal 2023 growth forecasts were also revised from 8.7% year on year to 8.3%.

India’s fiscal 2022 ends March. India’s fiscal 2023 begins April 1 and ends March. 31 in the next year.

Government data showed India reported 247,417 new infections over a 24-hour period on Thursday, with the daily positivity rate — which measures the share of Covid-19 tests that are positive — at 13.11%.

The data shows that there are approximately 1.1 Million active infections in this country.

India has so far identified 5,488 Covid cases that were caused in part by the highly contagious, new omicron strain that was discovered by South African researchers. As it takes some time for genetic sequencing of the genome to confirm if someone with Covid has contracted this strain, it is possible that India’s omicron cases are much more than reported.

Predominant strain in India is still delta.

India’s healthcare infrastructure is more prepared for the third wave of patients, but a sudden increase in cases could push it back.

Radhika Rao from Singapore’s DBS Group stated that there are regional variations in the availability of healthcare staff, facilities, oxygen ventilators, and critical care. She made these remarks in a January 6 note.

In the weeks and months ahead, the impact of the third wave may worsen. An annual festival will see thousands of pilgrims gather at Ganges River, eastern West Bengal. local media reports said.

A similar, large-scale religious event was partially responsible last year for the second devastating wave of infection between February and May.

Citi’s economists believe there are good reasons for optimism about a less disruptive Covid Wave. They include: lower hospitalization rates — such as what’s currently seen in cities like Mumbai — a shorter Covid wave cycle, higher vaccination coverage and a weakening link between Covid and economic activity.

The authors wrote, “A higher level of vaccination coverage will support policymakers in avoiding restrictive restrictions.”

India is fully inoculated nearly 70% of its adult populationA vaccination drive for children aged between 15-18 years was organized.

Retail inflation is causing rising prices to be a problem. India hit a 5-month high in December.

DBS Group’s Rao said the RBI last month indicated its preference for “a gradual road towards policy normalisation,” and diverging from global policy shifts — particularly from the U.S. Federal Reserve.

Rao says that disruptions in supply could keep inflation within the RBI’s upper limit of 2%-6% range for fiscal 2023.

“Sticky inflation and global rate adjustments lead us to maintain our call that the repo rate be adjusted to a cumulative 50bps per year in 2H,” she stated.