Locking down two different Indias 

#GS2 #Governance 

While some can practise social distancing, most Indians simply cannot as they have no social security. If the requirement was to keep the population indoors, strictly enforcing social distancing, how abjectly this has failed! If the requirement was to keep the population indoors, strictly enforcing social distancing, how abjectly this has failed! 

Decision without planning 

  • COVID-19 is a disaster that came with prior warning, and therefore did not warrant an arbitrary, unplanned and ill-prepared decision. The announcement was rapidly followed by suspension of all public transportation - again with practically no notice.   
  • A unilateral lockdown order, keeping millions of migrant labourers in suspended animation, was bound to fail.   
  • With doomsday predictions and no work, and no guarantee from the government, migrant labourers logically sought the security of their distant homes, like all of us have.  
  • They decided to travel any way they could, including by foot, to go home. Policymakers and the ruling elite have no clue about the lives of the unorganised workforce.   
  • No order will work unless the government recognises and addresses the dire circumstances of the so-called informal sector.   
  • Those secure in isolated rooms in spacious homes, with a huge food stock, cannot wish this problem away. A week of the lockdown has brutally exposed the callousness and indifference to the realities of India’s informal workers.   
  • Stranded without income security, transport or food, the walk home became a logical choice for these workers.   
  • Men, women and small children, wearing makeshift masks and walking for miles every day through different States, proclaim that if death comes, they would rather it be at home.  

Ensuring food and transport 

  • If the government can ship Indians abroad back to India at substantial cost, there is no reason why this transit can’t be better organised.   
  • Those already walking home should reach safely with proper screening en route, food in their stomachs, practical health protocols in their minds, and some reassurance in their hearts.   
  • When they reach their blocks, they can be put under observation, further screening, isolation, testing, and quarantine where required.   
  • Their families also have to be given minimum guarantees of food, health, and some income by the government for the next few months.   
  • We must remember that they are primary breadwinners, and the added anxiety of the survival of their families back home is also pulling them back.   
  • While many front line functionaries such as sanitation workers, government officials and health care workers have been working zealously and extending assistance, the government needs to ensure that this response is uniform and persistent.   
  • If supply chains of our most essential services are to be maintained, front line workers of all these services in the formal or informal sector must be given equipment, quick basic training, and adequate insurance.  

There can be no social distancing without social security. Critically, to pull through this as a nation, we must reduce our inequalities and persevere in this together. An already individualistic tendency has been reinforced by forced isolation. COVID-19 will affect the producer and the consumer. We will live, or die, in this interconnected world together.  

The cost of the lockdown is pegged at about $120 billion 

#GS3 #Economy 

Complete stop would put over 45 mn migrant daily wage earners out of work; government needs to do more to rescue industry and services if they’re to protect jobs  

  • The complete 21-day COVID-19 shutdown of most economic activity has created new roadblocks, causing severe disruptive impact on both demand and supply side elements across sectors. The cost of the lockdown is pegged at around $120 billion (approximately ₹9 lakh crore) or 4% of the GDP.  
  • Further, 90% of India’s workforce is employed in the unorganised sector and this lockdown will effectively put over 45 million migrants living off daily earnings out of work.   
  • Sectors like construction projects, mobility services, housekeeping and other informal sector employment will come to a sudden halt. The manufacturing sector faces a triple challenge.   
  • First, there are going to be serious supply chain disruptions not just when dealing with foreign parties, but also the domestic industry.   
  • Second, sectors like automobiles, pharmaceuticals, electronics, chemical products etc., are facing an imminent raw material and component shortage.  
  • Third, the shutdown and resulting loss of revenue is certain to cause a number of bankruptcies and closures, especially in the MSME sector with corresponding disruption to supply chains.  
  • On the demand side, several industries would get impacted starting with the consumer durable goods and will cascade to other intermediate goods and basic goods.   
  • The government was the major spender on investment in the infrastructure sector, which will slow down now with resources and attention being diverted.  
  • Hence, industries like steel and cement, which did well, last year, will stumble.  
  • The services sector will see a fall in demand. These include aviation, hotels, restaurants, tourism, retail malls etc. The real estate sector, which was already in deep trouble, could well slide even more, in the medium term at least.  
  • Even 10-20% job losses among its 7.3 million employees in restaurants across the country would mean up to 15 lakh unemployed. Any delay in addressing the economic consequences will lead to massive job losses.  
  • SICCI suggests the following: the Reserve Bank of India has to address two problems: Transmission on rate cuts has been inadequate.  
  • Second, rate cuts by themselves are unlikely to stimulate demand as the primary cause for demand contraction will be on account of consumer confidence being low.  
  • On electronic component and semi-conductor industry, the impact will be felt in the areas of logistics, packaging and testing.   
  • The government could lend support through tax holidays and zero-interest loans for three months.   
  • In the case of services sector, the government should consider contributing the employer’s share of PF for all employees earning less than ₹20,000 per month and ESI contribution for all employees earning below the statutory threshold level of ₹21,000 per month, for a period of 12 months.   
  • All companies should be asked to devote their CSR funds exclusively towards creation of clean quarantine centres, and addition of hospital beds, ventilators and PPEs, besides investing in testing and other facilities aimed at preventing the spread of the virus.  

High Net worth Individuals should be encouraged to do likewise. Additional tax concessions may be looked at for this sector. Women’s Self-Help Groups and the informal sector should be asked to produce masks, hand sanitizers, among others in a big way. Banks should be asked fund these activities and State governments should arrange for the marketing of these products to their local primary health centres.  

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