Can a battered economy afford a long lockdown

Barely two weeks into the Coronavirus lockdown, rating agency Fitch has downgraded India’s growth to a 30 year low. It’s now at the same level as the country was in 1991— that is, before late prime minister Narasimha Rao initiated the economic reforms. This is a colossal meltdown of our economy and its implications on people’s lives cannot even be fathomed in a quick analysis. The migration of millions to their villages is just a tragic vignette of the unwinding of our economy. If the government does not lift the lockdown soon in major production centers and farmlands, then we could see a return to the unimaginable dark ages.

The Coronavirus pandemic may provide a ready excuse for government ministers and economists to rationalize this projected fall, but the truth is that economies do not slide by 30 years overnight if their objective circumstances do not precipitate this. And there is plenty to indicate that the Indian economy was in dire straits much before the pandemic hit the world. The regular fudging of figures notwithstanding and the creative explanation about why the people were losing jobs may have fooled the gullible, but many experts were cognizant of the economy’s fragility if there was an external cause like the 2008 global slowdown. This time around the country may not repeat its Houdini act of emerging unscathed from a global crisis.

In 2008, when the Lehmann Brothers collapsed, it triggered off a banking crisis all over the world. India was one of those economies that weathered the storm. Besides some astute steps that the Reserve Bank of India took by raising interest rates, and the strong public sector built in the visionary idealism of the Nehruvian era, the real reason why the country weathered the storm was our unaccounted cash-based economy where people in big and small cities, towns and villages, kept hard cash to tide over any crisis. People saved it for marriages, education, ill-health and for pesticides when their crops are hit by pests — just for bad times.

Barely two weeks into the Coronavirus lockdown, rating agency Fitch has downgraded India’s growth to a 30 year low. It’s now at the same level as the country was in 1991.

On November 8, 2016, Prime Minister Narendra Modi — in one ill-conceived diktat — destroyed the so called ‘resilience’ and security of ordinary people when he decided to demonetize high value currency notes that was almost 85 per cent money circulation in the country. The impact was heart-breaking for those who had saved for many occasions. About 100 odd people died standing in endless queues in front of banks to withdraw their own hard-earned money.

According to economists — including former prime minister Manmohan Singh, there was a 2 per cent loss of GDP due to demonetization that was meant to cure the country from black money, fake currency, terrorism, and also was meant to organize the economy better. In money terms, 2 per cent fall in growth would mean about Rs 4 lakh crore. This ‘Tughlaqian firmaan’ resulted in the closure of thousands of small and medium enterprises, shops and businesses, and grievously hurt the construction industry. India never really recovered after demonetization.

Totally oblivious of how the note ban had smothered the economy, the government ushered the Goods and Service Tax (GST) on an unprepared country. This tax increased the hold of the central government over the states’ revenues and combusted local businesses by adding layers and layers of paper work. Entities that survived demonetization found it difficult to take on the demands of the GST. Again, many enterprises shut down. Commercial centers like Surat were in the throes of a violent agitation, but the government just steamrolled all opposition.

There have been a series of flawed and thoughtless decisions that have broken the back of the economy, but there is no one to tell the ‘Emperor’ what’s wrong with him and his world. Anyone who criticizes the conduct of the government and its policies is declared as the ‘Enemy of the State’. Only servile bureaucrats are prospering in an administration that hates any criticism in the media.

During the period of pandemic that triggered off mass migration and collective despair of tens of thousands of the working class, their families, and little helpless children, the government went to the Supreme Court to prevent the media from reporting independently. There were suggestions from the government counsel that the ‘exodus’ was prompted by fake news. The Supreme Court upheld only a part of the government’s submission that entailed to the media adhering to the government’s briefing on the pandemic. These are early days of the SC order, but it is open to interpretation by the government, that is, when it comes to the news reports that they disagree with.

There have been a series of thoughtless decisions that have broken the back of the economy, but there is no one to tell  ‘Emperor’. Anyone who criticizes the conduct of the government and its policies is declared as the ‘Enemy of the State’.

CORONAVIRUS AND REPORTS of its virulence from Wuhan, China, had entered into public discourse in January itself. The first case of infection in India was in January 31, but the government did not stir save for making perfunctory noises and stopping flights from China. The problem was bigger and the virus was giving an opportunity for a national response and preparation.

Wuhan’s example should have served as a template to prepare the country and society for it, but the Indian government in Delhi had other concerns and priorities. US President Donald Trump was visiting India to see “millions” of Gujaratis receive him at Ahmedabad. He claimed that his good friend Modi had told him that 4 million would receive him at Ahmedabad’s Motera Stadium. This was a preposterous expectation, which was brought down to 1.25 lakh in the repurposed arena where Modi, with great pride, welcomed him.

Government reports claim Rs 100 crore were spent on Trump’s short visit to India and the country’s response to the pandemic, according to many health experts, hence was delayed by five weeks. During this time, the government could have bought Personal Protective Equipments (PPEs) and put in place the testing architecture and health infrastructure in the country. Till a few weeks ago, only a dodgy Gujarati company was allowed to manufacture the test kits for Covid19. It was indeed bewildering.

The country needed to fast-track its production so that people could be tested, tracked and treated. Later, the Gujarati firm’s testing kit was rejected as it was found to be of poor quality.At this stressful time, people need the steady hand of a government that bases its decisions on empirical data, objective reports from the ground, compassion, efficiency and good sense. Can we expect this from a government that combusted the economy through devaluation, an unplanned GST and poor leadership?

After the delay in deciding the course of the government’s intervention even when Congress leader, Rahul Gandhi, repeatedly beseeched the PM to take the pandemic seriously, the government finally got into the act. It seems it woke up to the alarmist report from a US-based research group that predicted some 40 crores infection of the virus in a space of a few months. Modi first announced a ‘Janata Curfew’ on March 22 via a televised address on March 19 accompanied by the banging of thalis and clapping at a certain time of the day. Days later, rather abruptly, he announced that the country would be under a 21-day long lockdown — almost like a curfew.

No preparation was made for anything. No time was given to citizens, separated families, patients, doctors, workers, the poor, daily waters, business and industry. The miserable plight of daily wagers — 48 per cent of them are migrants — was brutally ignored.

What followed was a disaster. As lockdown meant complete cessation of all transport, millions, compelled by the loss of jobs and their ghettoized, rented accommodations, began to move towards their distant villages. Till the central government woke up — people had covered thousands of kilometers on endless highways, hungry and thirsty, carrying sacks on their heads and children on their shoulders, to reach the fragile and humble comfort of their distant homes. They were also hoping that the workers and villagers will be given food and shelter — both denied by the heartless cities and its massive administration.

These migrant workers rightly assessed that this lockdown was not just for 21 days — it could take far longer. The same sense is dawning on everyone now, across the country that this arduous wait for normalisation may prove to be longer. Now the International Labour Organisation (ILO) fears that due to the pandemic about 40 crores India may become jobless. This will be a catastrophe. Then there are prospects of hunger and fear of food riots breaking out in a country that has ironically huge food reserves. Never before has there been a more urgent need to prevent these two nightmares from raising their heads at a time when the fight against the virus is being aggressively communalized. The spread of the pandemic is being blamed on the Muslims to obfuscate the fact that the virus does not discriminate on the basis of religion or caste. But in a society struggling for economic and physical survival, hate and suspicion of the other is perceived as an easy way to comprehend this complex reality. Not unexpectedly, there have outrages and violence against the Muslims in different parts of the country inspired by fake news that have been given credibility by rabidly communal media, social media influencers and politicians.

No preparation was made for anything. No time was given to citizens, separated families, patients, doctors, workers, the poor, daily waters, business and industry. The miserable plight of daily wagers — 48 per cent of them are migrants — was brutally ignored.

The virus represents a big challenge to the idea of a secular, plural India and its constitutional democracy. If the citizens and political parties are not vigilant then they would have realized that they have lost far more in this fight against the pandemic than they had bargained for from a leadership that is loathe to answer any questions.

Undoubtedly, at this crucial and stressful time, people need the steady and calm hand of a government that bases its decisions on correct, empirical data, scientific and objective reports from the ground, compassion, vision, efficiency and good sense. That is the least beleaguered Indian citizens are expecting from its prime minister, and his insular government in Delhi.