A road map for India’s exit from the lockdown

Prime Minister (PM) Narendra Modi is in an unenviable position. Many state governments and most commentators want the lockdown to continue as new cases mount, including in areas hitherto free from the coronavirus pandemic.

Mathematically, even with the rate of doubling going up to over 11 days, because of the large numbers, or base effect in statistics, new cases will continue to increase substantially. At the same time, there is the issue of the livelihoods of over 400 million persons; many above the poverty line are liable to slip back due to the income shock of lost earnings.

Approximately 65% of the Indian economy is in the unorganised sector. What makes the situation worse is that over 90% of the workforce is informal with limited welfare entitlements. In fact, but for the Jan Dhan Yojana (cash transfer measures that have benefitted around 350 million people, including farmers, rural workers, poor pensioners, construction workers, low-income widows) and Ayushman Bharat (free medical cover up to ~500,000 for 40% of the population), India would have been facing a catastrophic situation. However, in the absence of a universal basic income or unemployment benefits, the economy, which is now operating at around 40%, must be restarted to provide income for the vulnerable population, and prevent millions of others from falling between the cracks.

The key question that PM Modi faces is how to unwind the lockdown without endangering the lives of millions of Indians. One of the co-authors of this piece (Maurice Kugler), along with a colleague, developed six options for the United States (US), and we attempt to apply these to India.

The surest way of controlling the pandemic is to keep the shutdown going till a vaccine is developed and the entire population immunised. The second option is for it to be eased off gradually, and as the curve flattens, its health and economic trade-offs both fall in the mid-range. The third option is a more aggressive version of the second, allowing for greater opening, but retaining the possibility of reintroducing a complete lockdown if the infection rate picks up. Under the fourth option, antibody tests are to be carried out and those who are immune can be allowed to move around freely. Under the fifth option, the entire population is to be tested once every two weeks. The sixth option requires contact tracing and widespread testing where cases are detected.

The first is not an option that India can afford as it would likely take 12-18 months for the vaccine to be available. Similarly, the fourth and fifth options can be ruled out for financial and logistical reasons and non-availability of enough test kits.

The trouble with the third option is that while its health costs are probably lower than the second, economic recovery would be more uncertain and distant. The outcomes could be volatile. It could leave policymakers with little room to manoeuvre and lessen their credibility with the people.

The only viable route for India would be to roll out a modified second option, allowing for greater opening faster, but with strict protection measures, along with the sixth option. Since the virus has a demographic preference (infants and the aged), an alternative is to keep these age-groups locked down. This is not possible in the Indian context, and the best way is to use geography as a determinant. This approach has already started in India with the identification of hotspot localities — the district is too large a geographical area to be a viable unit of disaggregation and would unnecessarily penalise millions.

The other is contact tracing backed by mass testing, if any positive case is identified. In reality, hotspots, as a concept, have limitations and we should be looking for “hot” persons. Therefore, the use of Aarogya Setu, and the procurement of adequate testing kits, personal protective equipment, and ventilators (including from domestic sources) has to be stepped up by an order of magnitude. Contact tracing is not going to be easy with even Singapore failing to get 20% of its population enrolled. But India has no option.

However, India’s imminent emergence from the lockdown will only be meaningful if the government and the Reserve Bank of India (RBI) adopt extraordinary and unorthodox policies. India should not worry about a one-time large fiscal deficit, and instead, carry out structural reforms in agriculture (open up markets, bring in forward trading) and industry (make acquiring land easier, encourage hiring, simplify taxation systems).

Similarly, despite the RBI loosening up monetary policy, banks will not be able to step up lending because of existing high-levels of non-performing assets. Learning from the US Federal Reserve, which is directly buying below-investment level corporate bonds, the RBI, with the government, should create a public sector entity that can pick up part of the equity of micro, small and medium enterprises that are otherwise sound, deploying their capital to reduce their term loans. Once companies recover, the equity held can be sold and costs recovered, where feasible.

The joint roll-out of the second and sixth options and the adoption of aggressive fiscal and monetary policies should enable India to ride out the worst of the pandemic, setting the stage for economic recovery later in the year.

The passing away of an iconRishi Kapoor belonged to a film family. But he stood apart for his sheer talent.

When Rishi Kapoor first emerged on the big screen — playing a young student who fell in love with his teacher in Mera Naam Joker — his acting talent was noted and he won a national award. But he also evoked curiosity for his lineage — he was Raj Kapoor’s son and Prithvi Raj Kapoor’s grandson. Belonging to what many may consider Bombay cinema’s first family is what gave Rishi Kapoor the opportunity to enter the world of cinema.

But it is truly a testament to his acting prowess that Kapoor so quickly outgrew this element of his identity. With Bobby, and a range of other romantic films in the 1970s, he emerged as a film icon with his own independent identity, loved by fans, particularly women, and praised by critics for his timing. He excelled in both, films where he was the solo star, as well as in multi-starrers. But Kapoor’s biggest strength was his ability to evolve. After a somewhat rough patch in the 1990s and an indifferent attempt at direction, he found his niche playing character roles of his age. Be it as the hero’s father or elderly friend, or an underground don, or middle-class protagonist, or most powerfully, a Muslim in contemporary India (Mulk), Kapoor brought his distinctive touch to each role. Admirers also got to know the man behind the actor through his outspoken tweets in recent years.

Kapoor’s death — he had been battling cancer — on Thursday and the outpouring of grief it evoked is a testament to how much he meant to so many people. He has left behind an incredible body of work spanning close to five decades. But few things made him more proud than his son, Ranbir Kapoor’s, success. The family tradition will live on, but Rishi Kapoor will stand apart.

A knockout punch to the economyCreating demand, by putting money in the hands of 800 million poor people, is the way forward

Any number of Sonny Liston punches will not knock out the coronavirus disease (Covid-19). It is here to stay. Nineteen deaths in one day and 67 in a week in Ahmedabad do not augur well. Health care workers around the country, in the absence of personal protective equipment, have been infected. Doctors, without protective gear, having risked their lives to protect people, have succumbed. Over time, the curve will flatten. Infection will increase with herd immunity setting in. By then, familiar with the precautionary measures, India will be ready to deal with those infected. The ultimate remedy is a vaccine which is at least a year-and-a-half away.

But the knockout punch to the Indian economy has serious long-term consequences. The 40-day economic freeze will take several quarters to revive. A global recession may well be round the corner. The estimated loss caused to the global economy is about $11 trillion. The United States (US) economy will have a negative rate of growth. India’s, too, will witness a negative growth rate this year. The fact that this virus originated in Wuhan, China, has geopolitical implications. In these changing global equations, the developed world will want China to lose its primacy as a global supplier of goods. Factories may have to relocate from the country. India may not be the most attractive destination for such relocations. Our tortuous regulations, illiberal mindset and a divisive environment, coupled with the lack of quality infrastructure and human resources, are serious impediments to attracting investments for manufacturing.

Our service sector may find it difficult to exploit global opportunities given the mood in the US to reduce its global dependence on goods and services. The nature of the labour market will change. The impact on modes of production will need rebooting. The self-reliance that Prime Minister (PM) Narendra Modi talks of is easier said than done. Any shift away from globalisation, which is likely, will impact us.

The government’s policy response to the pandemic has been wanting. North Block must realise that any advisory issued cannot be uniformly applied across the country. The lockdown has dealt a lethal blow to our economic revival. Had this been thoughtfully planned — and there was time enough to do that between January 28 and March 24 — India would not be facing an economic crisis of this magnitude. Migrant workers, stuck at shelter homes with inadequate food, water, sanitation and other essentials, are not willing to go back to work. They have unduly suffered during this period.

The directions issued to industry to start operations do not take into account realities on the ground. A seamless manufacturing unit cannot operate at 25% capacity. The cost of running the unit will not be economical. In the absence of demand, and an already full unsold inventory, there is no logic in running a unit. This applies to the automobile, steel, and some other sectors. The textile industry, which survives on exports, has been badly singed. The Chinese are willing to fill the vacuum. Buyers in Europe and the US, if not serviced, will move to other suppliers. The real estate sector needs special attention and a separate package. Its revival creates demand for steel, cement and sanitaryware. Besides, this sector generates employment. Micro, small and medium enterprises, the hardest hit, need immediate financial support to stave off massive closures and bankruptcy. This pandemic is unique for it disrupts our economy both on the supply and demand side. The demand side sectors bearing the brunt include trade, transport, travel and tourism, hotels, sports and entertainment. Financial services are also badly hit. On the supply side, India is witnessing supply chain breakdowns in respect of both imports and exports, with China, South Korea, Italy, Spain, France, Germany, the United Kingdom and the US. The pandemic has dealt a devastating blow to the economies of these countries affecting India’s global trade as well.

Domestically, with subdued revenue collections, India will have to rely on expanded borrowings and non-tax revenue sources. Postpone adhering to fiscal deficit targets and work out a substantial stimulus package to kickstart demand. States, apart from scaling up health care facilities and ensuring food security, must also provide income support to those who have been deprived of their means of livelihood. Along with falling Goods and Services Tax (GST) revenue shares, the excise earnings of states from the sale of alcohol and fuel have also dried up. With the near shutdown of industrial and commercial activity, the demand for electricity has fallen. Real estate transactions are also frozen. All this has put the finances of the states under real strain. The Union still owes about ~34,000 crore to states as GST compensation for December 2019 and January 2020. The Fiscal Responsibility and Budget Management Act, 2003, which limits state borrowing, will further hamper state governments in their attempts to revive the economy.

The frequent, often confusing, advisories issued by North Block are evidence of the government’s inept handling of the pandemic. The directive to employers to bear the burden of paying employees’ salaries during the lockdown, apart from being illegal, is blind to their differential financial capacities. We need plans of action, mandatory under the National Disaster Management Act, 2005. Decisions should be taken after consultations with stakeholder representatives. We need coordination between the Union, state and district authorities allowing for monitoring. Different sectors of the economy need separate bailouts.

The road to economic revival is to create demand to whet the appetite of supply chains. Demand can only be created by putting money in the hands of the 800 million poor whose capacity to earn has been impacted. This daunting challenge requires a national response. The government must display both transparency and the willingness to make decisions based on ground realities. The sensitivities of each section of society in formulating a policy framework must be considered. That alone will help us get back on track.

Returning home, finallyThe government’s move is welcome, albeit much delayed

Rudhra rudhra Maharudra

On Wednesday, the 36th day of the lockdown, the home ministry issued a set of guidelines to enable the movement of migrant workers, students, tourists, pilgrims and others stranded in different states to their home states. The government order stipulates that this can happen if there is a mutual agreement between the sending and receiving states; only those who show no symptoms after screening will be allowed to move; movement can only happen on road, in buses, while maintaining social distancing protocols; and those who return will either be in home or institutional quarantine, with periodic health check-ups.

The government’s order is welcome, though long overdue. Over the past five weeks, India has witnessed a looming humanitarian crisis. Migrant workers sought to return home from the time the lockdown was announced on March 24. Thousands walked or cycled home, hundreds of kilometres away. Facing a severe shortage of cash and food, they went through acute suffering. State governments did step in and arranged shelter camps, but this turned out to be inadequate. There was also an emerging law and order concern, as restless and angry migrants clashed with security personnel in cities such as Surat demanding they be allowed to go home. The Centre’s dilemma was understandable — it was apprehensive that mass return of migrants could lead to the spread of the coronavirus disease (Covid-19). But humanitarian and law and order concerns, and pressure from the ground, appear to have, finally, titled the decision.

The challenge is now in implementation. Reports suggest that there are 10 million migrants registered with different state governments who want to return home. Arranging transport will be a tremendous logistical challenge. The more important variable is maintaining the social distancing protocols during travel. Given that migrants are not going to be tested, but only screened, and many Covid-19 patients are asymptomatic, there is a possibility that individuals with the disease may be travelling. This makes the requisite distancing, and then strict quarantine, and effective monitoring once they reach their destination essential. It was important to address the demands of migrants given the human tragedy that was unfolding. But India cannot afford to see the spread of the disease across the rural hinterland, where health infrastructure is very weak. Getting this balance right will be critical in the weeks ahead.

Covid-19: An opportunity to overhaul green policies

The two overriding emotions that India is witnessing these days, thanks to the coronavirus-induced crisis, are fear and happiness. The first stems from the panic that the virus has caused and the harsh impact it has had on the poor and the economy. At the same time, there is a degree of relief at the impact on the environment; air and water bodies are cleaner now, and snow-clad mountains are visible from cities situated in the foothills.

But are these a cause for celebration? Many commentators point out that these developments are only a short-lived reality. When the lockdown is over, it will be business as usual, and we won’t slow down to remember this magical interlude.

The last two months, however, have made us intensely aware of the linkages that exist between the destruction of the ecosystem and the systematic plunder of the natural environment to the coronavirus crisis. These observations are not new, but now they are gaining traction because we are collectively facing a crisis. It is known that zoonotic diseases emerge due to anthropogenic activities, linked to unsustainable economic practices of plundering diverse ecosystems through deforestation, mining, and illegal trade in wildlife. The coronavirus disease (Covid-19), like Avian influenza, Ebola, Nipah, and Zika, has origins in excessive human influence on natural environments. The recent exhortation by the acting executive secretary of the United Nations Convention on Biological Diversity, Elizabeth Maruma Mrema, to ban wildlife markets is testimony to this.

A return to business as usual will be suicidal. A balance must now be achieved in how humans and other living beings, as well as natural ecosystems, survive, if not thrive, in each other’s company. The concept of “One Health” for humans, animals, and ecosystems can work as a guide to nations.

Originating from the discussions on biodiversity and the health of ecosystems, “One Health” is defined by the World Health Organization as “an approach to designing and implementing programmes, policies, legislation, and research in which multiple sectors communicate and work together to achieve better public health outcomes”. The areas of work in which a ‘One Health’ approach is particularly relevant, the WHO says, is “food safety, the control of zoonoses (diseases that can spread between animals and humans…) and combating antibiotic resistance.” We believe that “One Health” should become a key pillar of India’s environmental policy.

A recent European Commission report highlights the links between the coronavirus disease (Covid-19) and the climate crisis. The report noted: “Experts suggest that degraded habitats coupled with a warming climate may encourage higher risks of disease transmission, as pathogens spread more easily to livestock and humans. Therefore, it is important — now more than ever before — to address the multiple and often interacting threats to ecosystems and wildlife to buffer against the risk of future pandemics, as well as preserve and enhance their role as carbon sinks and in climate adaptation.”

Realigning the focus of environmental policy with the “One Health” concept will be transformational. It will prioritise the resilience of ecosystems as well as the relationships of humans and other living beings to their ecosystems, rather than focus on solutions like pollution control.

Such transformative change also requires new kinds of partnerships and alliances between actors within the government, civil society, and the private sector. To draw up a plan of action, the involvement of environmentalists, conservationists, and medical doctors will be a must. The ministries of environment, forests, climate change, and health and family welfare would have to work to develop and implement this transformative agenda.

There are some elements of this plan in the Government of India’s programmes, but these have to be more emphatically articulated and implemented. The Covid-19 pandemic has brought with it untold misery. But it’s given us an unexpected gift — the potential to press the reset button of the planet. We might celebrate the moment by taking photographs of peacocks on our terraces, but we shouldn’t lose the opportunity of a large-scale overhaul of our environmental policies.

Announce the stimulus, nowIt must be geared towards all businesses

Om namo shivai

It has been 37 days of the national lockdown. Besides the first announcement — on March 27 — of a ₹1.7 lakh crore package to provide what were rather minimal relief measures to the poor, the Centre has not yet come up with a package for the economy. Prime Minister Narendra Modi, in one of his first speeches to the nation on the coronavirus pandemic, spoke of the creation of a high-level economic task force to suggest measures, but little has been heard of it since. There are indications that the government is working on a stimulus. Besides the fact that this is already delayed, reports suggest that this is broadly focused on the micro, small and medium enterprises (MSMEs).

There can be no doubt that MSMEs have been severely affected due to the lockdown. They have little financial cushion; they employ the majority of India’s workforce; and they need urgent help. But it will be a mistake if the government just focuses on them, and ignores the demands of larger industry bodies that have sought a more comprehensive package. Given India’s socialist past, there is a tendency to look at bigger businesses with suspicion. But as the decades after economic reforms have shown, these businesses are critical. They provide mass employment, both in manufacturing and services; they are at the forefront of innovation; they can embark on larger projects that are critical for infrastructure needs; and their contribution to the revenue basket is key to fiscal health.

The lockdown has affected every sector, small and big. Given the complex supply interlinkages that exist among all segments of the economy, helping one part — while neglecting another — will not be enough. The expected collapse in demand will also affect all industries. That is why it is crucial that when the government announces its package, it must take into account all industrial activity. Announce the stimulus now, with an eye on all the moving parts of the economy.

One nation, one ration card

Om namo shivai

The Supreme Court (SC), on Tuesday, asked the Union government to examine the feasibility of implementing the “one nation one ration card” (ONORC) scheme during the national lockdown. The scheme, which allows beneficiaries to access food grains that they are entitled to under the National Food Security Act, 2013, from any fair-price shop in the country, was announced last June.

The SC’s nudge to expedite the ONORC is critical. Millions of out-of-work migrant workers are stuck in host cities due to the lockdown. Many have run out of money to buy food and don’t have a proof of identity like ration cards to access subsidised food grains via the well-stocked public distribution system (PDS). States where they are stuck prefer offering relief to their own residents first, and cite the lack of identity documents to deny benefits. And among those states which have opened community kitchens for out-of-job migrant workers, there have been complaints of the quantity, quality and type of food. Some feel that the ONORC scheme will not be of much help during the present crisis since many migrant workers have left their PDS cards in their villages. Instead, the Union government must expand the PDS system to cover all individuals, irrespective of whether they have a ration card or not, for at least six months.

While this must be done, the government must also fast-track the ONORC scheme because India’s present rights-based regime is based on the assumption that people are sedentary. This is not true given the high rates of inter- and intra-state migration. Without any safety net, migrants depend either on their employers or labour contractors for food provisions or purchase food in the open market. This increases their cost of living and reduces the additional earnings they might hope to remit to their families. During the lockdown, the crisis has become even more acute. But even after the coronavirus pandemic is over, this will be useful. Migration is bound to restart because of unemployment. When migrant workers again start boarding trains and buses for the destination cities, they must have their PDS cards that are valid across India with them.

Om namo shivai