The second wave of COVID is likely to hamper rural demand, reducing India's GDP prospects in 2021. As per economists, the severe impact of the pandemic in rural regions, and increases in healthcare and other associated expenditures, would dampen rural demand.

Significantly, this will influence industries such as two-wheelers, tractors, cement, and consumer durables, among others.

“Agricultural production will remain healthy, but the expansion of Covid may have a consequence on rural consumption,” India Ratings' Principal Economist Sunil Kumar Sinha told IANS.

Covid-19 infections are at an all-time high in India.

The most recent surge has brought in a record amount of patients, putting the healthcare infrastructure's capacity to deal with the spike in jeopardy.

State governments have been obliged to impose local lockdowns and travel restrictions, which have begun to hamper economic activity.

“Rural demand may be harmed because of the high health-care costs associated with COVID-19,” said Aditi Nayar, Chief Economist at ICRA.

“However, a regular monsoon will provide some relief for the rest of the year.” Emkay's Lead Economist Madhavi Arora stated that variables such as better adapted enterprises and policy response, secure financial conditions, vaccination drive, pent-up demand flow, and powerful global growth outflows create growth buffers in the face of slowing rural demand.

“Supposing COVID-II peaks in May'21 and limitations loosen by Q2FY22, we lower our FY22 GDP prediction to 9.9% from 11% before, by a further negative bias.” Furthermore, any influence on agricultural production will cause inflation to rise, shattering prospects for policy easing and credit expansion in the industry.

A strong monsoon season, and a lowering tendency in the second wave, particularly before the planting season, will halt the decline in rural demand.

“India is expected to get typical south-west monsoon seasonal rainfall, as forecasted by the IMD, raising the chance of strong harvests.” The extension of the COVID-19 to rural regions is the reason for more concern,” said Arun Singh, Global Chief Economist, Dun & Bradstreet.

“The poor quality of rural health facilities, and the flow of migrant laborers because of different constraints in metropolitan areas, may counterbalance a greater portion of the profits from the strong agricultural output.”

“There is still a prediction of a timely and enough monsoons in the current year, which we anticipate would assist to maintain good agricultural growth in FY22,” says Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research. Whereas the spread of COVID 2.0 in rural regions may influence agriculture, the amount of the damage will be determined by the duration of the pandemic surge.” “Unless the pandemic severity persists through the planting season in June-July, there may be a possible impact on the Kharif crop, although this is impossible to predict at this phase.”

The Indian industry applauds the GST Council's choices and suggests that zero-rating of COVID-relief goods be investigated.

India Inc. chiefly embraced the GST Council's decision on Friday to exempt COVID relief materials from duty and ease the compliance burden for taxpayers but said the initiatives fell short of providing a proper exemption from late fee payment to taxpayers but also skipped out on providing zero rankings of COVID supplies.

According to the industry body FICCI, the Council's decision to provide relief on imports of COVID-related items and Black Fungus drug was a welcome move, and now GoM suggestions will be anticipated to see what action is suggested on GST rates for other medical inventory for Covid, which include vaccines and ventilators.

“We are pleased with the GST Council's choices. We appreciate the government's efforts in combating the Covid-19 epidemic and improving access to medical supplies and solutions in the nation, so we are pleased that some of the important requests from FICCI have indeed been considered,” FICCI President Uday Shankar said.

“We anxiously await the report of the Ministerial Group convened to evaluate additional reductions in GST rates for Covid-related items. A swift decision on this front will help us achieve self-sufficiency at this critical juncture. We cannot afford to waste any more time at this point,” he continued.

The GST Council on Friday extended relief on the import of Covid-related relief goods purchased or intended for donation to the government or any other relief organization by removing them from the Integrated Goods and Services Tax until August 31, 2021. In addition, the medicine needed to treat Mucormycosis fungal infection has also been added to the list of commodities free from IGST.

The Council also proposed an amnesty program to cut late fees and give little respite to small taxpayers. FICCI, advocated for a remission of late fees and interest to offer optimal advantage to taxpayers affected by pandemic interruptions.

The choice to extend the due dates of several GST compliances for the months of May and June 2021 would therefore bring significant help to taxpayers throughout this tough period. Additionally, the news proposing voluntary return filing for taxpayers with revenue of less than Rs 2 crore for 2020-21 will bring relief to tiny businesses.

“FICCI too was expected to see a resolution on our long-pending demand for zero-rating of medical services for 24 months throughout this pandemic phase for the healthcare industry. “We feel that doing so will further strengthen healthcare endeavors to prepare for and address the ongoing second wave and the upcoming third wave,” Shankar added.

Although it has been noted out that present circumstances are not the appropriate moment to conduct correction of inverted duties, FICCI believes that the subject requires a prompt decision because it continues to harm our competitiveness.