INDIA’S COVID RESPONSE-AN ANALOGY AND FUTURE IMPLICATIONS

According to Worldometer (A public funded Corona-virus updates initiative of the world), the total tested samples in India as of Saturday, 15th August is (2,90,09,703), with over 26,18,877(3rd highest) infected people and 50,464(4th highest) deaths.

The Migrant exodus owing to Covid-19 which caused one of the biggest humanitarian crisis in modern India. Credits-(Shutterstock)

Positivity rate (total )- 9.02%

Positivity rate on August 15- Below 10 % at 8.78% as per the number of cases detected and the number of samples tested on August 15.( The WHO recommends below 10% as a parameter of effective response.)

Samples tested as of 15th August- 7.40 lakh (Holidays dampen testing)

1) The government says the death rate is decreasing. Is the truth being shrouded?

• This is a classic example of diversion tactics. When the total number of cases is the 3rd highest with the largest number of cases being reported for 8 days straight, then the number of deaths(4th highest) in thousands rather than in lakhs in lieu with Brazil and U.S., the ratio will obviously be low. But it shrouds the number of people who have died until now. The Mortality rate measurement is an effective shrouding of the lives lost due to the pandemic. India’s mortality rate is the highest in South Asia. It has reported over 5 lakh cases in the last 8 days i.e. the highest cases for 8 days continuously in the world. Note- The deaths of people due to the mass migrant immigration crisis and a subsequent food crisis owing to Covid-19 lockdowns haven’t been attributed to the official death toll due to the Covid-19 pandemic by the government.

2) The Government says to ramp up testing to 1 million tests per day by the end of August. Is it enough?

Worldometer Covid-19 stats. India has the 3rd highest number of reported cases in the world and the 4th highest number of recorded deaths. (Credits- Worldometer)

• 1 million tests per day will amount to testing 720 people per million/per 10 lakh of the population every day. The WHO recommends testing more than 1000 persons per million of population per day. India has tested around 2.11 percent of its population since March by the latest figures as of August 15, when the initial testing began. Countries which have opened up their economies like UK, South Korea, Japan, Singapore, Spain, Germany etc have tested more than 10% of their population and some countries have even tested over 20% of their population.
• To test 10% of its population with 10 million tests per day starting August 16, India will take around 110 days i.e., 3 and a half months apx. which is around the first week of December 2020. To test 20% it will take around April 2021. India has tested around 21,213 per million of population which translates to around 2.12% apx. of the Indian population as of August 15.

(All calculations assuming Indian population is 1.39 billion as of 2020).

3) How much do we need to test?

• Going by the stats of the Countries which have opened up, around 2.5 million samples a day need to be tested till a minimum of 90 days, i.e., around 3rd week of December from Aug 16 to test a sizable proportion of population. The Former Indian Reserve bank Governor Raghuram Rajan in a webinar with congress scion and leader Rahul Gandhi had echoed the same way back in the month of July that India needs to test a minimum of 2 million/20 lakh samples a day.

On Aug 14, India had tested the highest number of samples since March i.e. around 8.6 lakh samples.

4) Burgeoning Health Care deficit?Facing the Super Dense Crush Load.

Indian public health spending in percentage to GDP vs its Neighbours. Credits- Indiaspend and World Bank

• India spends 1.4% of its GDP on healthcare which is far lower than Asian peers Sri Lanka and Bhutan who spend about 2–2.5% of their GDP on health care. The loss in human resources due to inadequate infrastructure costs India around 240$ Billion dollars in losses per year to its GDP. India has planned to spend around 2.5% of its GDP on healthcare by 2025. India also has one of the worst doctor-to patient ratio in the world with 1:10189 whereas WHO recommends a minimum of 1:1000. India is facing a shortage of 6,00,000 doctors and 2 million nurses as of 2019. In India 65% of the health spending is out of pocket which pushes around 57 million Indians to poverty each year (Source-Economic Times). The ‘Ayushman Bharat’ health insurance cover scheme has somewhat been able to mitigate it but implementation and corruption remain key challenges. The Indian healthcare system has already crumbled under the influx of patients due to covid-19. Many blood curdling incidents such as dead bodies of patients who succumbed to Covid-19 have been nibbled by rats and dogs. Many cases of gross negligence of patients, inadequate PPEs, Deficiency in steady supply of drugs such as Remdesivir and Favipiravir and dead bodies rotting outside the hospitals in death bags have been reported. Many states owing to unavailability of beds have had to convert public arenas and complexes to temporary covid hospitals. The Radha Soami Satsang Beas centre in New Delhi is one such example which became the biggest converted Coronavirus hospital in the world with 10,000 beds.

5) Is the Economy holding up? An assessment of the damage being anticipated.

• According to S&P ratings the Indian economy could contract by over 5% if the pandemic peaks at July-August. Beyond that would lead to a 9.5% contraction. Assuming the Indian economy was measured at 3.02$trillion nominal as of March 2020, 280 billion dollars will be wiped out from our economy given the peak hasn’t arrived in India as of August. Given the current exchange rate of 1USD-74Rs; the amount of money that may be wiped off from Indian economy will be roughly equal to 20.72 lakh crore rupees. The Indian economy will again be valued at 2.74 trillion USD apx. at the end of the fiscal year 2020–21; the figures it reached on July 2019 setting us more than a year back. In this scenario P.M. Modi’s dream of making India a 5$trillion dollar economy by 2025 is a Utopian peril now. India’s defense minister Rajnath Singh on August 11, had said that “Had the Covid-19 pandemic not hit India, we would have been the 3rd largest economy (nominal) in a span of 7–8 years”.By his statement, if it were the pre-covid times, India would have taken 7–8 years from fiscal year 2020–21 to surpass Japan (The 3rd largest economy) which would have been valued at excess of 6.8 trillion$ USD in 2028. (Source-IMF 2019 projections).

6) Is India heading for a recession?

1) The slowest growth in Indian economy since independence in the first quarter of 2020. Credits-Livemint 2) The PMI index recovery hitting a bumpy road in July due to localized lockdowns. Credits- The Hindustan Times.

• In economics, recession is known as consecutive fall in GDP over two quarters of a fiscal year. India has so far avoided a recession as the economy has started to gather stream after the Unlock 1.0 guidelines initiated by the government. The first quarter (January-March) expanded at the slowest rate since independence at 3.1%. However the economic activity began to fall flat in July and August due to a serious of locally induced lockdowns (source-The Economic Times), which arises concern about the recovery of the Indian economy in the long run. Exports declined by 10.21% in July, the fifth straight contraction to 26.33$billion USD. Imports have also contracted by 28.47$Billion USD in July. The surplus of 790$Million USD was replaced by a deficit of $4.83 billion in July. However a surging Forex reserve of 539.19$Billion USD (5th largest as of 14th August) provides some cushioning to the economy. The reserves are enough to sustain an import bill of 13 months in the worst case scenario; however debt financing is always the last resort. India has also maintained a steady flow of FDI into the country amounting to 22$Billion in the first two quarters as said by Niti Ayog CEO-Amitabh Kant. The consumer demand has however seen a terrible slump with many economists arguing for direct cash transfers to the people, especially the lower middle class and the poor who constitute around 90% of India’s population. Direct cash transfers and subsidies in key products are likely to contribute to a gargantuan demand post covid-19 slump. However with rampant corruption in cash transfers and the limited reach of organised banking in India, the government needs to develop a robust and impervious mechanism for the same.

7) The austerity and reinvigorating measures announced by the government.

IMG-1(Detailed expenditures under the ‘Atmanirbhar Package’). IMG-2(Detailed infrastructure expenditure under the National Infrastructure Pipeline) Sources- Finance Ministry.

• On May 15, 2020 amidst the Unlock 1.0, P.M. Modi announced a whooping 20lakh crore rupees amounting to 280 Billion USD apx. to provide an impetus to the slumping Indian economy which included provisions for the MSMEs (Micro, Small and Medium enterprises), Poor including Farmers and migrants, Agriculture and ‘Atmanirbhar Bharat’ or self reliance in core sectors such as (Defence, energy, infrastructure, pharma, health etc). It also mapped the several policy changes and liberalization measures to be adopted by the government for facilitating the idea of ‘Atmanirbhar Bharat’ but how the funds will be raised amidst a lackluster GST collection and a fiscal deficit of over 80% remains a question. Further on the Independence day eve, the P.M. again announced the implementation of the ‘National Infrastructure Pipeline’ which was constituted in 2019 under DEA(Department of Economic Affairs) headed by Atanu Chakraborty to identify technically feasible and financially/economically viable projects for development during the year 2020–25. The total investment is in tune to 111.30 lakh crore or 1.4$trillion USD. According the Volume-I of the National Infrastructure pipeline report, India invested around 1.1$trillion USD from (2007–18). Now the government aims to invest more than the same amount in half the period. However the silver lining being that the 30% of the total investment will be by the center i.e. around 33.40 lakh crore (434.2Billion USD) and 40% will be borne by the states i.e. around 44.52 lakh crore (578.76 Billion USD). The rest will be raised by bonds, debentures, public offerings, divestment and loans. However the lackluster spending of 1,51,019 crore(20.5$Bn USD) on health over a period of 5years raises questions over the government’s commitment over affordable and proper healthcare. Total spending on social infrastructure has been pegged at 3,93,386 crore(54$Bn USD) (*Exchange rates at 1USD-74INR). Also it needs to be seen that if the National Infrastructure Pipeline will get separate allocations or the projects will be bundled with the General Financial Budget from 2020–25. The cost overruns and delay in execution of projects also threatens the viability of the goals enthused. India also further enhanced the national education policy in 2020 with a goal to spend around 6% of GDP by 2025; however it’s in contrast with the NIP allocations. It remains to be seen that if there will be additional sum allocations under the General Financial Budget. Austerity measures have been separately introduced by states albeit lacking clarity.