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Thursday, May 28, 2020

It is now essential to begin end of lockdown

This dilemma will always be larger than life when there is a single objective of saving lives in a pandemic. But it must also be recognised that the health of people and the health of an economy are interdependent.

Written by Deepak Nayyar | Updated: April 30, 2020 9:25:29 am
India coronavirus lockdown ,covid-19 india lockdown, india coronavirus deaths, indian economy lockdown This dilemma will always be larger than life when there is a single objective of saving lives in a pandemic.

Prime Minister Narendra Modi held his fourth round of consultations with state governments on April 27 to review the COVID-19 situation. The draconian lockdown, which completes 40 days on May 3, was discussed. As in the earlier meetings, several chief ministers urged that the lockdown be extended. While no decision was announced, the lockdown might well continue.

For governments everywhere, more so after the experience of Italy, Britain and the United States, where governments did too little too late, imposing and continuing lockdowns is a risk-averse strategy. If the spread can be curbed, it would bring political kudos. If it is not, the microbe is to blame. It is the equivalent of a one-way option in financial markets, where you cannot lose. This is even more attractive now as it conforms to herd-behaviour by governments worldwide. Of course, exit from a lockdown poses a real dilemma for governments. It is about decision-making under high uncertainty, which requires conviction and confidence.

This dilemma will always be larger than life when there is a single objective of saving lives in a pandemic. But it must also be recognised that the health of people and the health of an economy are interdependent, where both shape the wellbeing of people. Thus, saving livelihoods is an equally important objective. Obviously, getting sick and going hungry cannot be an either-or choice. Everyone would prefer to stay healthy and be well fed. It is the role of governments to strike a balance and reconcile these two objectives, rather than juxtapose them as conflicting, requiring a choice to be made.

Lockdowns, combined with mass-testing, contact-tracing, containment-zones, mandatory-quarantines, can only slow down the speed at which the infection spreads. This might help in countries where public health facilities are robust, yet not adequate for large numbers. But our public health system is poor and could never suffice for our large population if the pandemic spreads. There is no vaccine yet. From development through trials to production will be at least one year, and far longer before it becomes available in sufficient quantities for our massive population.

It is now absolutely essential to begin the process of exit from the lockdown. For one, it would enable the government to find some balance between the twin objectives of saving lives and saving livelihoods. For another, it would help restart the economy, which has been almost completely shut down, and the collateral damage is bound to be far greater if the lockdown is extended.

A calibrated, planned and phased exit could also help manage the spread of the virus. So far, morbidity and mortality associated with COVID-19 in India has been much lower than elsewhere in the world. This is possibly attributable to our immune systems, which have antibodies that could be effective in resisting the virus. After all, millions of migrants stranded in megacities or relief camps in cramped spaces have not caught the virus through contagion in large numbers. It suggests that there are already some elements of herd-immunity in India that would grow stronger as the lockdown is lifted slowly.

The economic and social consequences of the lockdown have been severe. A large proportion of the self-employed, casual workers on daily wages, and informal workers, who constitute 90 per cent of the total workforce, have lost their livelihoods. Demand has dropped sharply as employment has contracted. Supply has been strangled by the massive reduction in output. Government revenues, for both Centre and states, have collapsed. And, even if the lockdown is lifted now, economic growth during 2020-21 would be zero or negative.

For the poor – 75 per cent of rural households and 50 per cent of urban households – food security is at risk. It is a matter of survival. Similarly, for micro-small-medium enterprises, their survival is at stake. Large firms, except those with deep pockets, will also struggle. Whatever the government might stipulate, most firms will find it difficult to pay the wages of their employees, for these will only add to their cash losses during the lockdown. Healthcare for patients, except those with COVID-19, has diminished in terms of both access and quality. In education, learning outcomes, already poor, will get worse as schools and colleges remain closed. In every sphere, the short-term effects of the lockdown will have long-term consequences – hysteresis – as future outcomes will be shaped by this past.

For the economy, the sooner the lockdown is lifted the better. But the process of exit from the lockdown will have to be in calibrated steps based on a planned transition path in terms of sequence and speed. In this phasing, the geographical size and diversity of India provide degrees of freedom that are missing in most countries.

On April 27, of the total 736 districts in India, 283 districts had not reported any COVID-19 cases so far, while another 18 districts had no new case in the last 28 days (green zones). Thus, economic activity can resume without restrictions in 41 per cent of our districts. In addition, 48 districts had no new case in the last 14 days while 33 districts had no new case in the last 21 days. Thus, in 11 per cent of our districts that are orange zones, economic activity can be resumed in a phased manner.

Similarly, on April 27, there were nine states, in descending order of numbers, that had more than 1,000 infections: Maharashtra, Gujarat, Delhi, Rajasthan, MP, Tamil Nadu, UP, Andhra Pradesh and Telangana. Taken together, they accounted for 80 per cent of the infections and 57 per cent of the population in India. There were 13 states, in descending order, that had less than 1,000 infections: West Bengal, Jammu & Kashmir, Karnataka, Kerala, Bihar, Punjab, Haryana, Jharkhand, Uttarakhand, Odisha, Himachal Pradesh, Chhattisgarh, and Assam (in the last five, the number of infections was in double-digits). Taken together, they accounted for 12 per cent of the infections and 42 per cent of the population. The distribution of green, orange and red zone districts among states is uneven. The distribution of economic activity across states is also unequal. Even so, there are possibilities.

Economic activity can be resumed in districts without infections and in green zones. The orange zone districts can be brought in as they turn green. The lockdown should continue in states such as Maharashtra, Gujarat and Delhi (with limited relaxations where possible) and in red zone districts, containment-zones or hot spots within cities, as long as necessary.

In this decision to begin exit from the lockdown, PM Modi will need to act with the same confidence as he did when imposing the lockdown.

This article first appeared in the print edition on April 30 under the title “The Exit Dilemma”. The writer is an economist and former Vice Chancellor, University of Delhi

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