Corona may not kill the poor, hunger surely will

The coronavirus and the ensuing nationwide lockdown have crippled the entire economy. The lockdown cannot be extended indefinitely; we cannot wait for the pandemic virulence to subside and the then open up the economy.

While the effects of the lockdown are ruinous, the effects vary across sectors. Dun & Bradstreet, the firm providing business data and analysis, has said that a few industries such as drugs and pharmaceutical and retail are expected to bounce back much earlier than sectors that include micro small and medium enterprises (MSMEs), tourism, hospitality, banking, gems and jewelry, automobiles, electronics, and entertainment. Recovery in these sectors, which are labor intensive, could be painful and time-consuming.

In a recent report, Dun & Bradstreet said that the economic panorama continues to remain uncertain while the banking non-performing assets (NPAs)—assets that do not fetch any return—are set to rise once. Besides, MSMEs, which engage over 70 per cent of the unorganized labor force, are in the midst of a severe cash crunch.

The pandemic has led to the shrinking of demand, which is unlikely to pick up anytime soon—maybe not before this year ends. Most purchases, especially the ones with higher ticket size—whether a home or a car or even jewelry—will remain muted due to the rise of this unprecedented uncertainty encompassing health, social and economic parameters.

The lockdown was tough. Even when some relaxation was announced, the guidelines from the Ministry of Home Affairs outlining the dos and don’ts for promoters and entrepreneurs were a dampener. And now as May 3 approaches—the date of lifting the lockdown—the chorus underlining the need to extend the lockdown is getting louder and sharper.

Prime Minister Narendra Modi, in a review meeting with the Chief Ministers, left it to them to take a decision on whether or not to lift the lockdown.

It is not easy to shut down a country as large as India. Even China, where the coronavirus originated, did not lock down the entire country. Barring cities and areas where the spread of the disease was rapid and extreme, the country continued to operate albeit with restrictions and curbs. Comparing India with countries in Europe is nothing but absurd. First, the impact of the SARS-Cov 2 induced coronavirus is significantly higher in those countries than in India. Second, these countries are much smaller than ours.

The government and people of India must realize that there is a stark difference between restrictions and a complete lockdown. Yes, the number of coronavirus cases in India is on the rise and we must have restrictions and curbs in place, but to continue with the lockdown would be detrimental to the economy as well as society.

In fact, 60 per cent of the businesses in China revived as early as March and by April most economic activities had resumed. If we do not resume economic activities at the earliest, we will only lose out more business to China.

Many Indian exporters have complained that while their activities have come to a standstill due to the lockdown, in China it is business as usual and the country is once again proving to be the global supplier of goods, especially with economic activities coming to a near halt in most other countries.

India needs to arrest the steep economic slide staring at its face. It needs to immediately focus on three things. One, lift the lockdown with proper restrictions and precautionary measures, especially in areas where the virus has not spread.

Two, make a more conducive environment to carry out business. There will be some risks and in case an employee catches the virus, treatment should be meted out rather than closing the business or factory or penalizing the promoter, manager, chief executive, etc.

Three, while many have demanded a sector-wise stimulus package, it is important to remember that the economy cannot be seen in a fragmented manner. When the overall economy does badly, everybody suffers. Stimulus should be given to India Inc per se and not to specific industries.

Many medical experts have predicted that the virus is here to stay for now until a vaccine is available, which could be months away. If that is the case, we need to open up now. Thousands—especially those engaged as daily laborers and wage earners—are without jobs and with little food and money. They can’t be left to government doles and the charity of society. If Covid-19 does not kill them, poverty will..