India is the second-worst affected country by COVID-19 in terms of overall case numbers (10.8 million), accounting for just over one-tenth of the world’s confirmed cases and having suffered more than 155,000 deaths. And these disturbing numbers — both in caseloads and fatalities — continue to climb. The pandemic has also led to a large-scale economic disruption across various sectors and in all parts of the country. International multilateral institutions such as the International Monetary Fund (IMF) and the World Bank (WB) are forecasting additional job losses and a sharp economic contraction throughout the world, including in India.
In a March 24, 2020 press conference in Geneva, Michael Ryan, Chief Executive Director of the WHO’s Health Emergencies Programme, remarked in a press conference in Geneva that India had “tremendous capacities” to deal with the coronavirus outbreak and that “it is exceptionally important that countries like India lead the way to show the world what can be done.” As governments continue to grapple with COVID-19, it is imperative to study which measures have been effective and which have not. This article takes a brief look at the actions the Indian Government has taken to respond to the pandemic.
It is estimated that by the end of the first quarter of 2021, the government would need to infuse approximately $2 billion to improve the healthcare systems. Six times that amount would be necessary over the next decade to create about 2.5 million hospital beds. This is one of the key issues that Indian public health experts, economists, and the national, as well as regional governments in the country, are seized with.
The Toll and Trajectory of COVID-19 on India
The first case of coronavirus in India was reported on January 30, 2020. In the ensuing months, the number of confirmed cases of the virus and the deaths caused by it skyrocketed.
India’s infection rate is reported to be significantly lower than the worst-affected countries while the fatality rate — measuring the number of deaths against the number of confirmed cases — has been consistently low (i.e. 1.44 per cent). The imminent deployment of anti-covid vaccines has infused fresh hope that the deadly virus may soon be on its way out. Yet, in the meantime, the daily case count continues to mount.
COVID-19 has also dealt a severe blow to the country’s healthcare system and infrastructure, exposing large-scale vulnerabilities in terms of the lack of testing facilities, personal protective equipment (PPE), trained nurses and doctors, and ventilators along with a shortage of beds and hospitals for virus-infected patients. India currently has just one bed per 1,000 patients and five patients per doctor, well below the World Health Organisation (WHO) prescribed minimum standards of three beds per 1,000 patients.
If this be the case, and assuming that there could be a rebound in cases during the winter or thereafter, it is estimated that by the end of the first quarter of 2021, the Government would need to infuse approximately $2 billion to improve the healthcare systems. Six times that amount would be necessary over the next decade to create about 2.5 million hospital beds. This is one of the key issues that Indian public health experts, economists, and the national, as well as regional governments in the country, are seized with.
The pandemic has caused enormous economic distress, as India has entered the most severe recession since the mid-1990s, the year when India began its economic reforms programme, attracting foreign direct investments (FDIs). The GDP growth rate, which had been on a downward trajectory since 2015-16, has even further contracted following the pandemic caused by long periods of national lockdown. A report by the UN Conference on Trade and Development (UNCTAD) issued in September 2020 forecast that the Indian economy will have contracted by 5.9per cent in 2020. The same report also stated that “the contraction registered in 2020 is likely to translate into a permanent income loss.” A June 2020 survey of small-end medium-sized businesses (SMEs) by the All India Manufacturers Organisation warned of a “mass-destruction of business.”
According to a Centre for Monitoring of Indian Economy (CMIE) report released in September 2020, among the many hardships that the pandemic has brought in its wake, approximately 21 million salaried jobs in the country have since been lost, causing untold misery.
During the current COVID-19 period, according to a report submitted to the Indian Health Ministry, it is also estimated that anywhere between 22-25 million labourers have left their places of work in urban centres and migrated back to their villages for the want of employment. Some 200 million migrant workers in India are also estimated to be severely affected due to the virus and to be fully or partially out of full-time employment. Added to this number are those in rural areas whose livelihoods have been severely disrupted and have less likelihood of a return to normal anytime soon.
The National Lockdown: Its Costs and Consequences
On March 24, 2020, the Indian Government made a bold decision to impose an initial 21-day nationwide lockdown on the country’s more than 1.3 billion people — a measured delivery of essential goods and services and for police subsequently extended through the end of May. The initial stage of the lockdown restricted people from leaving their homes; suspended all transport services (except for fire, and emergency services); and shuttered all educational institutions and manufacturing facilities. In early June, the Ministry of Home Affairs (MHA) issued fresh guidelines for the phased relaxing of restrictions and “unlocking” of the economy.
The Oxford COVID-19 Government Response Tracker (OxCGRT), in its report based on data from 73 countries, reported that the Indian Government responded more stringently than other countries in tackling the pandemic. The day after the lockdown was initiated; OxCGRT awarded India a perfect score of 100. A news report to this effect published on ABC Live India bore the headline: “India Starts World’s Largest Social Distancing to Defeat COVID-19.”
Several epidemiological models and a number of other sources have credited the early lockdown with having slowed the spread of the pandemic and averted a much higher death toll. In a survey conducted in August 2020, 70 per cent of respondents said the lockdown and related measures had saved (many) lives.
However, the lockdown measures came at a fairly high economic and physical cost. Its sudden implementation had a severe impact on millions of low-income migrant workers and daily-wage earners. Migrants returning to their villages (from urban centres of their work) on foot or fleeing overcrowded and unhealthy quarantine centres, in turn, placed an enormous burden on the already fragile rural healthcare infrastructure.
Given that the national economy had begun to shrink in the pre-pandemic phase, India had been trying to take measured steps on managing its economy both from the aspects of monetary and fiscal policies, and trying to bring the economy back on its well-heeled foot. Then came the pandemic and the ensuing national lockdown, taking the national economy to an unprecedented slowdown amid the fear of a long and substantial recession in the economy on top of adverse consequences caused by the pandemic.
According to a Centre for Monitoring of Indian Economy (CMIE) report released in September 2020, among the many hardships that the pandemic has brought in its wake, approximately 21 million salaried jobs in the country have since been lost, causing untold misery. As the pandemic continues to unfold, the rise in levels of the number of salaried jobs is likely to continue amid fears of a drying economy and the onset of recessionary pressures.
SMEs that are a vital part of the industrial production process have suffered heavily due to large-scale disruption in industrial production and economic activities. According to a survey by Local Circles, within the first eight months after the pandemic began, 78 per cent of Indian startups and SMEs had reduced their workforces to supply chain disruptions, lockdowns and economic losses. The effects of these massive job losses continue to be felt.
Overall, the COVID-19 pandemic has brought untold pain, misery and economic distress to many millions of people and various industries throughout the country. While the impact of the pandemic continues on the economy, industrial production activities and other economic activities continue to unfold, the forecast is that the economy will take longer to recover to be able to reach pre-COVID-19 levels only from the year 2022.
Last May, Prime Minister Narendra Modi announced a large economic recovery (reforms) package pegged at $260 billion, which is aimed at strengthening the country’s supply chains through public-private partnerships to reduce national dependence on foreign sources of essential life-saving supplies during any future pandemic.
Economic Mitigation and Recovery
Since the disease outbreak, the Indian Government — like the other governments elsewhere — has struggled to put in place a stimulus package and economic recovery plan to respond to the devastating socioeconomic effects arising from the pandemic.
The Government has also taken a measured and calculated plan for economic recovery and stimulus, which has come in a piecemeal manner. It initially set aside one per cent of its Gross Domestic Product (GDP) to support informal workers and the homeless; providing direct cash transfers. It subsequently (in a follow-on measure) appropriated approximately $50 billion to address the issue of bank liquidity and another tranche of about $26 billion to help keep small and medium-scale enterprises to stay afloat — bringing the recovery package to 15 per cent GDP overall.
Last May, Prime Minister Narendra Modi announced a large economic recovery (reforms) package pegged at $260 billion, which is aimed at strengthening the country’s supply chains through public-private partnerships to reduce national dependence on foreign sources of essential life-saving supplies during any future pandemic. This recovery package is the largest by far in independent India’s history, accounting for 10 per cent of national GDP and 70 per cent of India’s total budget for FY 2020-2021. India is thus among the top five nations to have set aside 10 per cent or more of GDP toward economic recovery.
To secure the wellbeing of the nation’s poor and vulnerable groups, the Government announced on June 30, 2020, a national food programme for 80 million rural and urban poor going up until December 2020, costing the national exchequer approximately $12 billion. This national food programme became essential in securing basic food items for the poor until the onset of the economic recovery and the arrival of agricultural produce. The “One nation, One ration” card scheme was also launched during the pandemic, providing a food ration to people across the country, irrespective of their domicile and place of work, bringing more transparency to food distribution while potentially avoiding a large-scale mass migration.
Opposition political parties, however, have been critical of the Government’s response to the pandemic. The criticisms range from the complaint that the Modi Administration took too long to generate the economic recovery and fiscal rescue plan for both the people and struggling sectors of the economy, in particular, sectors such as retail, hospitality, construction, auto and industrial manufacturing. The Government, for its part, has maintained that India, given its overall financial capacity and the nature of the raging pandemic, needed to target its financial resources and direct them accordingly to achieve maximum impact both in reviving the economy and in ensuring the wellbeing of the poor and SMEs — the latter being vital elements of large businesses’ supply chain, and thus the key to regenerating industrial growth in the post-pandemic era.
Besides having begun manufacturing COVID-19 jabs, India rolled out its indigenous vaccine on January 16, 2021, in what is the largest inoculation exercise in the world. It aims to vaccinate some 300 million people by August 2021 without charging health workers, first responders, and those above the age of 60 years with co-morbidities. The country has so far inoculated more than two million priority people and is going to follow it through with the vulnerable category over time up until August. Additionally, India, in a rare goodwill gesture, has supplied millions of jabs to “friendly” countries both within South Asia and beyond into Africa and Latin America.
As the Government is also set to present its annual budget later in February, it is widely expected that it will take into consideration a full-spectrum view of the economic losses, joblessness and industrial slowdown and direct its budgetary measures to safeguard the health of the economy and wellbeing of the people by balancing monetary policy with fiscal stimulus.
It is also hoped that the locally-manufactured vaccines will not only instil a sense of confidence in its people but will likely handle the virus more effectively, and in the process, help build its economy better and in an equitable manner.
Pooran Chandra Pandey specialises in diplomacy, geopolitics and development cooperation covering energy, sustainability and climate and environment issues at the intersection of India, China and Russia relations. A founding CEO of the Berlin-based global think tank, Dialogue of Civilizations Research Institute (2016-2018), he also worked with the United Nations (2011-2016) and Times of India (2007-2011), in senior leadership roles. He holds an MPhil degree in International Studies from Jawaharlal Nehru University, New Delhi and has been professionally trained in Russia, China, Sweden, Germany, US, UK and Japan. Pooran is also a British Chevening Scholar at the London School of Economics and Political Science.
This article was originally published at Middle East Institute, Asia Program, Washington DC.
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