Gnarly choice between medical & looming economic emergency

06:13 AM Apr 14, 2020 |

The war on coronavirus is more about taking measures to minimise its spread in the community. This explains why some of the state governments like Maharashtra, Punjab, Odisha, Telangana and Tamil Nadu have extended the lockdown till April 30. We are yet to hear from the central government about the exact roadmap of the second phase of nationwide lockdown.

Hopefully, Prime Minister Narendra Modi’s address to the nation today at 10 am will bring more clarity. The coming weeks hold the key to whether India, currently in the early ‘growth phase’ of the virus spread, will stay on course to enter the ‘steady phase’ of the pandemic. If that happens soon, the ‘ending phase’ of the spread may not be very far. However, it is also true that India is a few weeks behind the curve in its response to the disease.


This is reflected in our under-preparedness: low testing rate, shortage of medical equipment, protective gears and limited isolation and treatment facilities. India is far behind the developed world in tackling a virus epidemic of this kind because we are a poor country with per capita income of around $2,000. According to October 2019 IMF report, India is 124th in per capita income among 192 countries.


This is reflected in the poor state of general infrastructure, and public healthcare in particular. With only 1.6 percent of GDP spent on public healthcare, historically it has been the most neglected sector in the country. Given our slothful bureaucracy, inefficient government machinery and self-serving political class, we are often late in acknowledging and responding to a crisis.

This is a cause of lack of trust between people and the government. Currently, the government seems more focussed on containing the virus spread and tackling the medical aspects of the crisis. But unless it is backed by aggressive tracing, testing, quarantining and treating, lockdown will not deliver the desired result. Every country in the world is battling the novel virus in its own way.

While doctors and scientists are struggling to understand the nature of the virus and working out models to fight it, countries are looking at how other countries have fared and which model to follow to minimise the virus spread, death and economic disruption. The immediate challenge for every country is to ease the pressure on its public healthcare system by containing the virus spread, both numerically and geographically.

Some countries like China and South Korea have done it better than others. But US, the most powerful country in the world, is struggling to contain the disease. Density has become a problem in hospitals in some cities in the US, particularly New York. Same is the case with some of the European countries like Italy, Spain, Britain and France. Needless to say, the European countries have managed it better than the US. India’s ability to manage the crisis is under test. COVID-19 is a first-of-its-kind threat the world has seen in recent history.

Since the Second World War, no country has witnessed social and economic disruption on this scale. Not many countries are capable of dealing with the crisis of this nature. India may not lack the will and commitment in dealing with the situation, but certainly lacks the resources. This is evident in the government’s response to the pandemic: a combination of maximum measures (lockdown) for the citizens and minimum action (rate of testing, shortage of medical equipment and size of the relief package) for itself.

A proactive approach will enable to curtail the spread effectively and thereby minimise the social and economic damage. While a lot of economic damage has already been done, extended lockdown will prolong the pain caused by a sharp reduction in economic activity. This calls for an urgent economic package, particularly for the small and medium businesses, to tide over the losses and prevent mass layoffs.

Compared to India’s population and population density, particularly in urban India, we have done quite well in containing the virus. With 308 deaths and 9,152 infected cases so far, we may never reach the cases-to-population ratio seen in Western Europe and the US. The world as a whole has reached over 1.8 million cases and 1.13 lakh deaths, while the US alone accounts for more than 5.61 lakh cases; New York alone accounts for more cases outside of the US than any of the worst-affected European country.

Probably, the worst is yet to come in America; its health officials have admitted that US could see a far bigger death toll. The choice before the Indian government was: risk the infection spreading or impose a total lockdown causing tremendous socio-economic disruption. While India’s lower tally of infected cases is because of lower testing rate, lockdown has succeeded in containing a US or Europe-like situation. But it’s too early to say where we will end up.

The economic cost of lockdown, an unprecedented and largest in our history, is huge for India. Assuming 80 per cent of production loss, the economy, according to CARE Ratings, is slated to take a hit of Rs 35,000 to 40,000 crore on a daily basis. This amounts to around Rs 6.3 to 7.2 lakh crore cumulatively over 21 days. The assessment is based on FY20 real GDP of Rs 140-150 lakh crore. With 16 more days added to the lockdown now, the cumulative loss will be more than 10 lakh crore.

As major engines of the economy are shut, barring the essentials services and farming, the key challenge before the government is to keep the wheels of the economy moving, lest the efforts to prevent a medical crisis becomes an economic one. Economic activity has ground to a halt. Manufacturing and services sectors have shuttered. Logistics has suffered similar impact, which has affected the movement of essential supplies. Agriculture, which employs the largest number of people, has been severely affected.

As sources of income have dried up, the urban poor and daily wagers are on the brink of starvation. The possibility of near starvation of landless and daily farm workers in rural areas is a major cause of concern. Government data shows, on an average, rural households have a monthly surplus of only about Rs 1,400, which is often used to repay the debt. In poorer states like Jharkhand, Chhattisgarh, Odisha, Bihar and Uttar Pradesh, most rural households only have a surplus one-fifth of that figure.

Therefore, the question is: in the battle of lives versus livelihood, should a medical emergency be given precedence over an impending economic emergency? While the government’s dilemma is understandable, it is also a fact that India can ill afford to keep 80 per cent of the economy shut to save lives from coronavirus.

The writer is an independent Mumbai-based senior journalist

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