Delhi Reopens a Crack Amid Gloomy Economic Forecast for India

NEW DELHI — The Indian capital, which just weeks ago suffered the devastating force of the coronavirus, with tens of thousands of new infections daily and funeral pyres that burned day and night, is taking its first steps back toward normalcy.

Officials on Monday reopened manufacturing and construction activity, allowing workers in those industries to return to their jobs after six weeks of staying at home to avoid infection. The move came after a sharp drop in new infections, at least by the official numbers, and as hospital wards emptied and the strain on medicine and supplies has eased.

Life on the streets of Delhi is not expected to return to normal immediately. Schools and most businesses are still closed. The Delhi Metro system, which reopened after last year’s nationwide lockdown, has suspended service again.

But the city government’s easing of restrictions will allow people like Ram Niwas Gupta and his employees to begin returning to work — and, more broadly, to start to repair India’s ailing, pandemic-struck economy. Mr. Gupta, a construction company owner, must replace the migrant workers who fled Delhi when a second wave of the coronavirus struck in April, but he was confident that business would return to normal soon.

“Immediately we will not be able to start work, but slowly in six to 10 days we will be able to mobilize labor and material and start the work,” said Mr. Gupta, who is also the president of the Builders Association of India in Delhi.

At least one million people in Delhi’s construction sector will be able to return to job sites.

Even a small opening represents a gamble by city officials. Just 3 percent of India’s 1.4 billion people are fully vaccinated. Because of limited health infrastructure and public reporting, the state of the pandemic in rural areas — including some just outside Delhi — is largely unknown. Experts are already predicting a third wave while cautioning that the lull in Delhi may be just a respite, and not the end, of the second wave.

Six weeks ago, the number of new cases in Delhi was soaring, reaching a peak of 28,395 new recorded infections on April 20. Nearly one in three coronavirus tests came back positive. Hospitals, full beyond capacity, turned away throngs of people seeking treatment, with some patients dying just outside the gates. Cremation, the preferred last rite for Hindus, spilled over into empty lots, with so many bodies burned that Delhi’s skies turned an ash gray.

The nightmare in India’s capital appears to be over, at least for now, even as cases rise elsewhere in the country. The city reported 648 new cases on Monday, and about four-fifths of the intensive care unit beds were vacant.

Officials in Delhi, and around India, feel a need to strike a balance between pandemic precautions and economic viability.

On Monday, India released a new set of numbers that showed the country’s economy grew by 1.6 percent for the three-month period ending in March.

But economists say those numbers, which reflected activity before the full impact of the ferocious second wave, are likely unsustainable in the near future.

The Ministry of Statistics and Program Implementation also forecast that India’s gross domestic product would shrink by at least 7.3 percent over the financial year that began in April.

Experts point to two main reasons: India’s prolonged lockdowns and its vaccination rate, which has fallen to just over a million doses a day now from about 4 million last month because of the country’s limited vaccine manufacturing capacity.

Though the lockdowns have helped India slow the surge of infections, economists say restrictions might need to remain in place at least until about 30 percent of the country’s 1.4 billion people have received one vaccine shot.

“We estimate that India will reach the vaccine threshold by mid- to late August, and, accordingly, expect restrictions will be extended into the third quarter,” Priyanka Kishore, the head of India and Southeast Asia at Oxford Economics, said in a research briefing last week. “Consequently, we have lowered our 2021 growth forecast.”

She added that supply issues and vaccine hesitancy could prevent the country from reaching the 30 percent threshold by August, which could result in further economic decline.

One economist said that the impact of the country’s shrinking economy would be even more pronounced in rural areas.

“As things stand now, the scale, the speed and the spread of Covid has once again given a push back to the economy,” said Dr. Sunil Kumar Sinha, the principal economist at India Ratings and Research, a credit ratings agency. Dr. Sinha added that the country’s negative growth forecasts for the financial year were the lowest ever recorded.

The lockdown that began easing on Monday was nowhere near as severe as the nationwide lockdown imposed by India’s prime minister, Narendra Modi, last year, which pushed millions of people out of cities and into rural areas, often on foot because rail and other transportation had been suspended. Mr. Modi resisted calls by many epidemiologists, including Dr. Anthony Fauci, the director of the U.S. National Institute of Allergy and Infectious Diseases, to reinstitute similar curbs this year.

But in a nod to the chaos of last year’s lockdown, throughout the second wave, core infrastructure projects across the country, which employ millions of domestic migrant workers, were exempted from restrictions. More than 15,000 miles of Indian highway projects, along with rail and city Metro improvements, continued.

Most private construction sites, however, were closed down, placing workers like Ashok Kumar, a 36-year-old carpenter, in extremely precarious positions.

Mr. Kumar usually earns 700 rupees, about $10, per day, but has sat at home idly for the last 40 days, unable to pay rent to an increasingly impatient landlord. He hoped to be vaccinated before returning to close quarters with other workers, but hasn’t been able to secure a dose at one of the city’s public dispensaries, which have closed intermittently because of vaccine shortages.

“My first priority is my stomach,” Mr. Kumar said. “If my stomach is not filled I will die even before corona.”

In a meeting with the city’s disaster management authority on Friday, Delhi’s chief minister, Arvind Kejriwal, said the lockdown would be eased in phases according to economic need.

“Our priority will be the weakest economic sections, so we will start with laborers, particularly migrant laborers,” many of whom work in construction and manufacturing, Mr. Kejriwal said.

Millions of people in India are already in danger of sliding out of the middle class and into poverty. The country’s economy was fraying well before the pandemic because of deep structural problems and the sometimes impetuous policy decisions of Mr. Modi.

Epidemiologists in India generally approved of the Delhi government’s approach to lifting its lockdown, but cautioned that the low infection numbers may represent a reprieve — and not the end — of the capital’s terrifying second wave.

“It’s not a decision that can be questioned on the merit, but obviously they have to take the maximum care,” said Dr. K. Srinath Reddy, president of the Public Health Foundation of India.

India averaged 190,392 reported cases per day in the last week, a drop of more than 50 percent from the peak, on May 9. The death toll also fell, though less precipitously, to 3,709 on Sunday. The overall toll of 325,972 is widely considered to be a vast undercount.

As cases have fallen in Delhi, people have cautiously left their homes for evening strolls after the daytime summer heat has abated, or to pick up groceries from the normally bustling but now quiet neighborhood markets.

Elsewhere in India, the pandemic is far from over. Cases are rising in remote rural areas that have scant health infrastructure.

The state of Haryana, which borders Delhi and is home to the industrial hub of Gurugram, extended its tight lockdown by at least another week. And in southern Indian states where the daily case numbers remain high, official orders allowing manufacturing to resume have been met by resistance from workers.

“It is a question of life versus livelihood,” said M. Moorthy, general secretary of the workers union at the Renault Nissan auto plant in Chennai.