‘Preventing food shortages is high priority for South Asia’ 

#GS3 #Economy 

Disruptions in the supply chain and panic buying can lead to price spikes and loss of income can affect the most vulnerable, says World Bank economist 

  • In a report released this month, the World Bank predicted a ‘dire’ situation for South Asia due to the economic impact of measures to counter the novel coronavirus pandemic, suggesting that the eight SAARC countries (Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan, Maldives and Sri Lanka) will experience their worst economic performance in 40 years, with at least half of them falling into a deep recession. 
  • Managing migrant returns, service sector revenue losses and ensuring food security for the poorest are major priorities for the region. 
  • The forecast for the South Asian economy in the WB report, with an expected drop from 6.3% growth to 1.8% - 2.8%. is quite significant.  
  • This forecast already includes many adverse impacts. The upper and lower bounds are based on two scenarios for advanced economies: one with a two-month lockdown of advanced economies, the other with a four-month lockdown of these economies.  
  • These scenarios translate for South Asia into sharp declines in exports, disruptions in global value chains, deterioration of investment sentiment, reversal of capital flows, and reduced remittances.  
  • The World Bank has endorsed India’s strict 40-day lockdown, which other South Asian countries have followed in varying degrees. 
  • With limited health-care capacity, it is important to contain, or at least mitigate, the spread of COVID-19. But, with a high population density, this is a difficult task.  
  • Containment of the pandemic is especially challenging among slum dwellers, domestic migrant workers and refugees. An additional complication is that the lockdown deprives the most vulnerable people of their income.  
  • It has to be complemented with food distribution, temporary work programmes and a system of testing and tracing, which is needed to reopen the economy.  
  • The temporary work programme could focus on food delivery, production of protective equipment, disinfection of public spaces and on the testing and tracing system. It is commendable that the Indian government is rolling out a tracing system now. 
  • It is likely that migrant workers, especially in the Gulf countries, will return home, even if many are still stuck abroad at the moment. It is the consequence of the global recession and the sharp drop in oil prices.  
  • They will need to find work at home and will indeed compete with domestic migrant workers. That is why the government should create conditions under which the economy can be reopened and should play an active role in job creation. 
  • Disruptions in the supply chain and panic buying can lead to price spikes. That, together with loss of income of many informal workers, can lead to food shortages for the most vulnerable.  
  • Releasing strategic reserves is one tool in the toolbox. Work programmes and food deliveries are other tools. Export bans will backfire as they will disrupt food supply chains in the region further. 
  • Tourism will not return to normal till effective vaccines become widely available. There will be demand for safe tourism. That might be an opportunity for the Maldives that with its many atolls and high-end tourism has an opportunity to test tourists and keep them away from large crowds. 
  • There might be also more demand for digital services like remote learning or other remote services and for delivery of e-commerce sales. It is likely that more jobs outside the tourism industry can be created. 
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