New COVID outbreak in China: India Inc says no need to panic yet

With the global economy—already struggling with the war in Ukraine and stagflation risks—worried about the impact of another COVID-19 outbreak in China, India Inc is cautiously optimistic that the resilience of the Indian economy will help avoid any large-scale disruptions.

Subhrakant Panda, the newly-appointed president of FICCI, said there is no need for panic yet, but alertness is certainly called for, and that the Indian economy and corporates have the depth and resilience to withstand any "short and sharp" disruption to the global supply chain.

"I believe the government is on top of things," he said, recounting how the government handled the unseen pandemic—first imposing lockdown when little was known to keep it under control, to a graded reopening of the economy, and finally, to carrying out world's largest vaccination drive once the vaccines were available.

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The Union Health Secretary has reportedly written to the states to keep an eye on genome sequencing of new cases to see if there is a mutation.

"I don't think there is a need to panic. But alertness is called for," said Panda, who is also the managing director of Indian Metals & Ferro Alloys Ltd and was head of the COVID Task Force at FICCI during the peak of the pandemic.

Stating that he would not like to speculate on the reported outbreak in China, he said, "I hope for the sake of the world, and I hope for the sake of the Chinese population that these are mostly mild cases, and it is not disruptive beyond a certain point." Chinese cities are reportedly witnessing a wave of COVID-19 cases after Bejing loosened 'COVID Zero' protocols that had kept the pandemic at bay.

If this turn out into a new outbreak, movement restrictions would follow, derailing the pickup in the Chinese economy—a key pillar of global growth. As a manufacturer to the world, any disruption to exports may result in shortages that could drive up inflation internationally.

"From India Inc's perspective, the Indian economy and Indian corporates are resilient. We have a situation where cyclical sectors are concerned, corporate balance sheets are significantly deleveraged. There is not much you can do beyond this.

"Now, if there are sectors that are China-specific, they will face disruption. One has to deal with it, and I hope that this is a short, sharp disruption, but again as I said, I would not like to speculate and really look at it more from a human perspective than an industry perspective that things don't spiral out of control," he said.

China, he said, plays a significant role in global supply chains. "So yes, if there is a disruption, that will have an impact, but at this point in time, I would prefer not to speculate."

The COVID cases have surged in China after the government's decision to lift a raft of strict restrictions, including quarantine and isolation protocols, which had largely insulated the country's 1.4 billion people from the worst impact of the pandemic.

Panda said little is known about the actual size of the outbreak as China tightly controls news flow. "We will get to know in a week to 10 days."

"The concerns are that if you have an uncontrolled spread of COVID, then again there will be disruptions to the Chinese economy, which will have a knock-on effect on the rest of the world. And the second part, more concerning at some levels, is that you may have newer mutations, which may cause a problem," he added.

However, in the case of India, the good news is that almost all adults are double vaccinated, and significant numbers have got booster doze as well.

"The government is on top of the ball by ensuring that we monitor new cases to ensure there is no genetic mutation," he said. "From the FICCI perspective, I hope we don't have to revive the COVID task force." He said the government handled the pandemic brilliantly.

"How well we addressed the pandemic—whether it is in terms of economics support or the fact that we locked down in the beginning because nobody knew what we were dealing with. You didn't know what will keep it under control, and the only way to deal with the unknown was to have a lockdown."

"But even during the lockdowns, I think, the central and state governments were very pragmatic in allowing certain sectors like continuous process industries, etc., to run, which is why we had a good outcome," he said.

Also, the vaccination drive was done "absolutely brilliantly". The government carried out the world's largest vaccination drive smoothly and ensured all documentations are electronic. "It is a matter of great pride that we have our certificates in digilockers and our mobile phones. The people in the largest economy are walking around with a little white card, how do you ensure that is genuine? I think it was fantastically handled," he said.