How Effective is India’s Unlocking Strategy
The first Coronavirus cases can be traced back to November in China, with WHO acknowledging human-to- human transmission on 16th of January 2020. Since then it has spread to every nook and corner of the world, to 215 countries according to Worldometer as of 14th of September 2020. The first Coronavirus case in India was detected on 30th of January, in the state of Kerala. Since then the country was placed under a strict initial lockdown of 21 days from 24th of March 2020, extending thereupon till June 8, 2018 barring any physical movement thereof. Since then India has been gradually opening up in phases with the consensus of the state governments and centre in gradual relaxations under Unlock 1.0(June 8), Unlock 2.0(June 20), Unlock 3.0(August 8) and the latest being unlock 4.0(August 30). India’s lockdown was regarded as the strictest in the world and largest of its kind ever, placing its 1.39 billion citizens under norms akin to a ‘house arrest’ allowing only the purchase of essential goods (food and medicine). Ironically enough India enforced its lockdown when the country was detecting Covid cases in double digits and started to lift its lockdown in phases when it was detecting Covid cases in almost five-digit numbers (almost 10,000 cases on June 8 and 97,000 cases in a single day high on September 12). Many countries such as Spain and Italy which were the worst hit in Europe with the onset of the Coronavirus pandemic enforced a strict lockdown when the cases were starting to peak there( Spain-More than 2000 cases detected on the day of imposing lockdown, Italy- 9,172 cases detected when the lockdown was imposed, and U.K. too). However after the lifting of the nationwide lockdown only when very low caseload was reported, the opening up was almost immediate with only sporadic and cluster lockdowns to contain the Coronavirus in high risk areas; Spain imposed lockdown in Galicia and Lleida on 5th and 6th July to contain a new covid outbreak. Spain also re-imposed partial lockdown measures on 10th July to contain the re emergence of a ‘2nd wave’. The U.K. too imposed a lockdown on 23rd March to contain the spread of Coronavirus and partial measures still persist as of September 14. However even amidst the reports of a ‘second wave’ in these countries, none have witnessed the astronomical rise in cases reported during the peak of the first wave yet except Spain and France; although cases are still on rise owing to lifting of strict restrictions of the lockdown (Spain- 10,476 cases on September 4th, Italy- 840 cases on August 20th and U.K. — 2,988 cases on September 6th). These countries have also improved their testing infrastructure and have impressive test figures per million (Spain-230,050; Italy-164,518; U.K- 298,584; France-153,130). Large population countries such as China* and U.S. also have crossed the 100,000 mark per million in testing (U.S.-282,526; China-111,163*). Cases have already peaked in China and U.S. but the onset of the second wave still looms strong while the cases in India haven’t peaked yet.
(*disambiguated data)
India’s lockdown and unlocking- The curious theory of ‘Covid Sprinklers’.
India’s lockdown boomeranged on itself, argues Pakistani economist Anjum Altaf and Indian economist; Nobel laureate Kaushik Basu. The lockdown paradoxically stemmed the largest migration crisis ever witnessed in India after the mass migration of Independence from 1947–50. The reverse migration mostly happened from the states which account for 60% of India’s GDP output, namely Gujarat, Maharashtra, Karnataka, Tamil Nadu, Kerala, Andhra Pradesh and Telengana. Ironically enough these states account for 65% of India’s Covid caseload too with Maharashtra alone accounting for 21.6%. As per census of 2011, India had 45.6 crore migrant workers (38% of the total population) with 99% of total migration being internal and 1% being international. Maharashtra, Delhi and Gujarat wee the largest recipients of the internal migration. The theory can be better understood with the example of Ganjam district in Odisha. Over 4 lakh migrants returned to Ganjam on the fears of the contagion spreading in their areas of livelihood, as said by District collector Vijay Amruta Kulange (mostly from Surat, Ernakulam, Hyderabad, Nasik, Pune and Mumbai) through 200 migrant special trains and 2200 buses. Ganjam was in a green zone until the migrant exodus happened pushing the covid case load in Ganjam as well as Odisha. As seen on an interactive graph in Odisha’s covid dashboard, cases started to increase astronomically in Ganjam from 8th of June when Migrants in mass started reaching their homes. On peak Ganjam was recording 283 cases on 8th of July and accounted for almost 30.86% of Odisha’s total covid cases on 6th of August, despite not being as urbanised as the Khordha and Cuttack districts of Odisha. Mass Exodus also happened to states of Jharkhand, Bihar, Uttar Pradesh, West Bengal and Assam. Among these states only Odisha and Assam have high testing rates bettering the national average per million (India-42977; Odisha- 58750, Assam-79870, WestBengal-25780, Jharkhand-39190, Bihar-41530 and UP- N.A. as of September 16). Apparently these states also fare poorly on Niti Ayog’s health index. So the extent of the outbreak and the magnitude of infection are apparently visible in cities, small cities and urban clusters at these places where there are adequate medical facilities and man-power. Most of the testing conducted by these states is also being done in urban dense areas (mainly in Khordha, Cuttack, Rourkela, Kanpur, Lucknow, Ranchi, Jamshedpur, Patna, Guwahati etc) which constitute just a bare minimum of the population given the urbanisation rates of these states being lower than that of the National Average( Bihar-11.3%, Assam- 14.1%, Odisha- 16.7%, Jharkhand-22.04%, U.P.- 22.7% and W.B.- 31.87%) with only West Bengal being marginally above the national average. Thus the Coronavirus cases which were mostly concentrated in the large urban conglomerates of India have effectively travelled to the rural areas which house 70% of the Indian population and now, with migrants travelling back to their workplace after failing to find adequate work at their home place, the unlocking taking place and the economy slowly opening up; there is a catastrophic risk of a 2nd wave in the urban areas such as Surat, which have effectively controlled/ inhibited the spread of infection. The migration of migrants will also spur the load further on the industrialised states of India which already host 65% of India’s covid infections if mass testing and quarantine of asymptomatic persons doesn’t take place seriously. India is thus the victim of a lockdown paradox, much in line with the famous Epicurean Paradox.
Recipe for unlocking- Failure or Success?
India started opening up when it cases haven’t had peaked yet. Now it holds the distinction of reporting the most number of covid cases in a day (97,500 on September 12) and the fastest growing covid-19 tally in the world adding 1 million cases in just 11 days while it had taken 110 days to breach the 1 lakh mark. Testing might be impressive with figures of 11,16,842 samples being tested on 16th of September but when compared to India’s huge population of 1.39 Billion(apx.), it comes to a mere 804 persons per million being tested every day, far below WHO’s recommendation of testing around 1000 people per million of population every day. India needs to scale up its testing to at least 14 lakh a day to meet WHO’s testing criterion and to aggressively cap the further spread of infections keeping in line with movement of people returning to the complacency of pre-covid levels, India needs to test around 2–2.5 million samples a day i.e. around 1440–1800 apx. samples per day, per million. As far as so there has been no mention of this, to scale up testing to meet the movement of people by MHA in it’s unlock guidelines.
India’s unlocking strategy so far has been to keep covid cases low and stem up the economy from the morbid crisis it is facing due to the lockdown. The first has been a complete disaster as India’s covid cases are the fastest growing in the world adding 1 million cases in Just 11 days. Healthcare infrastructure is already crumbling and deaths due to covid are increasing rapidly. Infact India has been posting the highest Covid causalities in the world for quite some time. In a time when cases across the world are slowing down, even in erstwhile epicenters, India’s covid situation is exacerbating. The government has allocated a fresh expenditure of 2.36 Lakh crore with 40,000 crore being allocated to the MGNREGA scheme.
Coming to the Economic front, Goldman Sachs has painted an even grimmer picture of the Indian economy with Q3 and Q4 GDP estimates at -13.7% and -9.8%. The fall in real GDP can be as high as -14.8% for FY 20–21 with green actual recovery taking place only during Q2 of 2021. The lockdown stringency boomeranged as “Na saap mara, na lathi tuta”.
But some green shoots of economy are stemming promising hopes of a recovery.
The August Economic Review 2020 by the Ministry of Finance states that
1)Passenger vehicles sales are up mostly in rural areas showing signs of a revival. Rising sales of fertilizers and registration of commercial and agricultural tractors from March to August to almost pe-pandemic levels are indicatives of a strengthening rural demand.
2)Momentum in railway freight is inching close to June levels but still far away from the pre-pandemic levels.
3)The Indian steel sector witnessed a V shaped recovery in July from its April lows with consumption (domestic and industrial) gaining pace. Construction also picked up but lost some momentum in July compared to June.
4)Power consumption is almost reverting to 97% of the pre-covid levels as of 31st Aug.
5)E-Bills reached 13.8 lakh crore in August, reaching 97.2% of the corresponding month of the previous year. Number of E-Bills also reached 95.6% of the previous year levels.
6)The GST collections have tapered somewhat in comparison to the high of June in July and Aug. With GST collections standing at 86,449 crore for August 2020, 88 percent of the of the same month last year.
7)Toll collection in highways reached 85% of the pre covid levels in August but localised lockdowns and floods remain a concern.
8)UPI transactions hit an all time high of 2.9 lakh crore in July signalling a shift to online transactions towards online payments amidst the pandemic.
9)Exports have increased in Crude Oil and Petroleum, Ores and Minerals, Engineering goods, Textiles, Gems and Jewellery and; Agri and Allied. Non-POL, Leather and manufacture, Electronic goods, Readymade garments, Iron ore and; Drugs and Pharma are still lagging to rise to pre covid levels as of June 2020. Imports have remained relatively muted and less uniform in July signalling a weak demand for consumption.
10)Urban unemployment fell drastically to 8.32%, the lowest since the lockdown began despite a loss of 21 million salaried jobs by the end of August in India. And
11)Rupee largely remained around 74.5–75 INR/USD. Foreign exchange reserves are valued at 537.5$ Billion US (August 21). Foreign direct investment declined to 4.4$Billion in May-Aug in contrast to 7.2$Billion a year ago.
However challenges remain; The Industrial output suffered a record drop of -38.1% for FY 20–21, August CPI inflation at 6.69% is an aversion to consumption. According to a study done by Azim Premji University on the informal sector of the economy which contributes 51% to India’s GDP and employs 93% of India’s workforce (Economic Survey 2018–19), the covid-enforced lockdown will exacerbate poverty. India has around 40–50 million seasonal migrant workers and among them 90% have already lost their source of income while 42% didn’t have ration for a day. Another survey found that 96% haven’t received food rations from the governments and 89% have not been paid their wages by the employees. Only 30.8 million jobs were provided by MNREGA in 15–29 April as opposed to 273.96 million in the corresponding period of 2019. The covid-19 will have adverse effects on socially vulnerable groups in order of Muslims, STs, SC and OBC with Muslims constituting the highest share in informal workers. Also, tax incentives exclude the informal economy with major importance on businesses and individuals.
Integration of the informal economy into formal economy is lagging which forbids us from having a fair assessment of our economy in strengths and vulnerabilities. The MSME, the largest employing sector is still by large decoupled with the Formal business which remains a challenge.
Thus by far India’s unlocking seems to be spurring the economy with green shoots but burgeoning covid numbers pose an astronomical challenge to the very idea of unlocking India. India has suffered the worst in GDP as well as Coronavirus cases, which suggest that the lockdown was a total failure on part of the government. Even after realising the deficit in its health infrastructure the government allocates a mere 1,51,019 crore for FY20–25 under the Atmanirbhar Bharat package designed to stimulate the green shoots in the economy as part of the Unlock strategy. For the Unlocking to properly mitigate the ills of the Covid-19 lockdown the government must immediately control the outbreak of covid-19 in India or else it risks a deeper economic fallout owing to localised lockdowns and travel restrictions. Market volatility might increase further and consumer spending also risks falling into complacency unless the government controls the Covid fallout and rise in cases immediately. Whether unlocking was a success or failure cannot be established in the economic front until the end of FY 21 and the yearly data coming in. However, the economic data so far till August 31 promises green shoots as well as harsh realities which will determine the economic recovery of India.
(Sources- Ajim Premji University,The Hindu, Times of India, Financial Times, Ministry of Finance, Odisha Covid Dashboard, BBC news and The Telegraph)
