IMF says the surge represents a ‘worrisome downside risk’ to India’s economy, and it’s the poorest who may be worst hit.
The United States Chamber of Commerce has warned that the Indian economy – the world’s sixth-largest – could falter as a result of a record spike in coronavirus cases, creating a drag for the global economy.
Myron Brilliant, an executive vice president of the Chamber, the biggest US business lobby, said on Monday that the risk of spillover effects was high given that many US companies employ millions of Indian workers to run their back-office operations.
“We expect that this could get worse before it gets better,” Brilliant told the Reuters news agency, citing a “real risk” the Indian economy would falter.
“There’s a big concern about the drag on the [US] economy by a devastating, spreading virus in India.”
The surge in cases appears to already be affecting the Indian economy.
The Bloomberg news agency reported on Monday that high-frequency data are pointing to a deepening contraction in India’s retail activity in the week through April 18 relative to its pre-pandemic January 2020 level.
That is a key risk for an economy where consumption makes up about 60 percent of gross domestic product.
For now, Brilliant said the focus was on helping the Indian people.
The Chamber and CEOs from 40 firms on Monday launched a public-private task force to provide India with urgently needed medical supplies, oxygen and other assistance and unveiled a new portal in which US firms can offer in-kind donations.
The partnership also includes the US-India Business Council, the Business Roundtable and the US-India Strategic Partnership Forum, the Chamber said.
Chamber officials and the CEOs met with Secretary of State Antony Blinken and White House adviser Kurt Campbell on Monday to discuss the depth and breadth of the economic and humanitarian crisis facing India.
India is now the epicentre of the global pandemic, with infections rising by 352,991 in the last 24 hours and crowded hospitals running out of oxygen supplies and beds.
The US and other countries pledged urgent medical aid to try to contain the emergency.
Many US companies had already pledged to provide financial assistance, logistics and transportation support and key medical supplies including oxygen generators and concentrators, the Chamber said.
US goods and services trade with India amounted to $146.1bn in 2019, according to the US Trade Representative’s office. India was the ninth-largest US goods trading partner, with some $92bn in two-way trade in 2019.