India’s Covid-19 affliction curve continues to trend downward for the second week in a row, as daily cases declined 22% sequentially in the week ended May 23 (faster than the 15% fall the week before). Daily new cases now average 2.5 lakh, down from 3.3 lakh in the week ended May 16. While daily cases have dipped, testing continues to increase, growing 11% in the last week. Accordingly, test positivity rate (proportion of daily cases to samples tested) has dropped to 13.1% (from 18.8% a week earlier). Recovery rate improved to 88.7% as of May 23 from 84.8% the previous week. With cases falling and recoveries rising faster, active cases over the week have declined for the first time since the second wave began, falling 17% on-week.

Taking together the decline in new cases, positivity rate and active cases, coupled with improving recovery rate, the country as a whole may have crossed the peak of the second wave on May 6, when 4.14 lakh cases were recorded. To be sure, some states such as Tamil Nadu, Odisha and Assam are still under a strong viral grip, with increase in cases over the week. On the other hand, Uttar Pradesh, Madhya Pradesh, Rajasthan have seen some of the sharpest declines in cases.

The economic impact of the second wave of the pandemic on states will be determined by the covid caseload, nature of lockdowns, structural composition of output (across sectors/regions) and pace of vaccination. States with higher dependency of output on contact-based services, and slower pace of vaccination coverage will remain more vulnerable.

Vaccine availability remains a national bottleneck. As of May 23, daily vaccinations reduced to ~980 per million people from ~1,455 per million a week earlier. The world average is 3,564 per million.

Meanwhile, high-frequency indicators of the economy continued to soften the past week, except for railway freight, which increased moderately on-week.