It has been four months since China informed WHO of the novel coronavirus and it has already brought the world to its knees. IMF chief Kristalina Georgieva opined that the world economy was already ‘sluggish’ before the Coronavirus but now is bound to suffer a ‘severe recession’. World Economic Forum predicts unemployment to be higher than during the Great Depression, oil prices are negative and the whole of global economy is on a slope downwards. India, like other world
governments, has been trying proactive measures in its fight against the pandemic, but it is imperative that we do better than other countries because we cannot afford to slack-both on lives and livelihood. The problem here is acute because of the huge population and most of them are in
the informal sector.
On 24th March, PM Modi declared a country wide lockdown for 21 days which was later extended till May 3. It ensured growth of cases remained linear rather than exponentiating thereby giving healthcare capacity breathing space.
But the lockdown also brings in other problems. According to the 76th round of National Sample Survey, average household size is 500 sqft and per-capita size is 116.2sq ft, but in the 33510 urban
slums, average size is less than 40 sqft; to put this in perspective, it is smaller than an American prison cell. This makes stay-at-home policies problematic.
The lockdown measure has been accused of being elite biased which is partly true considering the plight of the migratory workers and government’s lack of foresight to contemplate it, but it’s a
classic catch-22 situation wherein either measure would have some disadvantage. Also the lockdown is more pro-poor than it has been given credit to; imagine a situation where people contract the disease in large number, considering the insufficiency of our healthcare system it is
safe to assume that people who could afford would take use of the system before the poor which would leave them in a limbo. So the government’s decision to declare a lockdown is justified (although could’ve been far better and well-informed) because it was not a matter of choice but one of survival.
Does One Size Fit All?
The lockdown cannot continue, at least the way it is now but should not also be relaxed totally jeopardizing the gains of the past month. The economy is the lifeblood of people, especially in the informal sector where they work to make their daily ends meet. The government introduced a relief
measure which does not seem to be enough. Reports suggest only 15% of pulses have been distributed.
Apart from subsistence, the people in the informal sector have many other monetary issues which urge them to get back to work and the disability to understand such urgency could be because of elitist ignorance. It is important to add that researchers from the Takshashila Institution assert that for every 1% rise in GDP, 1.78 million people come out of poverty; imagine the loss in extending the lockdown- it is not just a function of how much money corporations can make.
People are talking about ‘The National Strategy’ on how to relax the restrictions but is there one single approach to this great diverse nation? As on 24th April, 15 districts have not reported any new cases since 28 days and 80 districts have not reported any new cases since 14 days, while
clusters have emerged at certain pockets; thus the spread of the virus has been disproportioned.
Therefore the National Strategy should not be ‘National’ but should be decentralized to the district and panchayat level with basic guidelines from the Union. The Home Ministry recently released guidelines on how to relax the lockdown and left the determining authority to the States. It
mandated certain sectors to open although with social distancing norms and reduced attendance; it also specified that these relaxations were not for identified hotpots.
Classification based on absolute indicators could provide more information for targeted measures; also, it would make citizens more informed of their area and the risks relating to it.
Living with COVID-19
The virus is here to stay, for at least more than a year and we have to learn to live with it in a way that reduces the spreading of the virus while we are able to treat patients and discover a vaccine.
Principal Economic Adviser Sanjeev Sanyal has hinted that ‘most sectors will be open by May 3’ and that the process of ‘unwinding’ the lockdown has already begun.
It is already time that we look at alternative options to open the economy. Business people and Industrialists like Kiran Mazumdar Shaw and Rajiv Bajaj have gone on record to plead for the relaxation of lockdown for better economic activity. The latter even went on to say that “what was
started by the virus has been taken forward by not-so-smart government action”.
Researches have suggested using colour codes like Red, Yellow and Green to specify the risks at a block level. Thus people in the Green areas would be able to go on with their lives with social distancing and face-masks, thus restarting the economy one place at a time.
There would exist other problems in restarting the economy, for example the situation with the banks is glum. Even though RBI reduced reverse repo rate to 3.75% to stimulate lending practices, banks are ready to earn a low return by parking money with the RBI than lend. Such complications
lingers which could disincentivise the economy.
Economics is filled with trade-offs and their ‘opportunity costs’ but we are in a position of wanting both sides for furtherance of society. It is important that in these times of crisis, we need to find middle ground and trace the desirable path for saving lives and livelihood. Or is such desire
idealistic and impractical? Either way it is important to keep looking at the positives and do the best work to defeat the virus and trade-off the virus for a healthy world.