Although the second wave has ebbed, the increased presence of the Delta variant and the subsequent mutations of the Covid-19 presents the third wave a real risk for the country, as per a new report.

The risks are real and rising as the pace of vaccination has slowed down to under 3.4 million doses daily as of 12 July from four million in June and two million in May, due to supply constraints and vaccine hesitancy. Also as many as 45% daily infections are being reported from rural areas, points Tanvee Gupta-Jain, Chief Economist at UBS Securities India.

On the other hand, economic activity has improved sequentially for the seventh consecutive week to 12 July, as some states have gradually eased mobility restrictions, notes the report.

Although the second wave is behind us, the risk of a third wave has increased. With the presence of the Delta variant and subsequent mutations of the virus, we consider the third wave a real risk. The number of daily new cases seems to have plateaued but still remains much above the 2021 trough and the decline in active cases has started narrowing, she said in a note on Wednesday.

According to the report, what is more worrying, is the fact that in over 20% of the topic caseload districts where the second has ebbed, the third wave has set in firmly, which was only 5% a month ago.

In over 20% districts, where the cases have bottomed on daily basis new cases till last week, going by the new cases it is clear that the third wave has firmly set in. This compares to only 5% a month ago, she notes in the report.

As of 12 July, only 381 million doses were administered: while 22.7% population above 18 have received the first dose, only a paltry 5.4% of the 900 million who are to be inoculated have received both doses.

Gupta-Jain further says that though economic indicators are normalising, they are still mixed. Railway and domestic airline passenger traffic have improved further but toll collections have plateaued for the latest reporting week, according to the UBS-India activity indicator.

Also, while power demand was up 11% partly on summer season demand, railway freight has declined by 1.9% w-o-w and to cap it all vehicle registrations contracted 9% as of 12 July, the first time since the last week of May, maybe due to the price hike announced by auto companies to offset the increased production cost.

Again, while the labour force participation rate improved to 40.6% from 39.6% end-June, urban and rural unemployment has picked up marginally. Further, the below-trend monsoons so far could have adversely affected summer crop sowing to the tune of a negative 10% in rural areas.