When Covid-19 cases began to get reported and the numbers began to shoot up around the world, the supposedly best bet was to lock down everything in face of ill-preparedness. These tough preventive measures may prove effective in evading the wrath of the deadly virus, but they will hit the economy badly.
The prolonged ‘Janata Curfew’ in the form of a 21-day nationwide lockdown has led to chaos. The nation was already facing the brunt of an economic slowdown before it went into this unprecedented lockdown. Every business has been hit, except perhaps that of manufacture of certain kinds of medical equipment. The services industries, such as airlines, travel, tourism and hospitality, are all reeling from the blow. But the hardest blow has been dealt to the backbone of the economy, India’s informal sector, which provides livelihood to more than 85% of the total workforce. In the spur of a moment, millions of people working in India’s informal sector have been thrown out of work.
As daily-wage earners were rendered jobless overnight, and as food supplies began to vanish and no help came from government, India’s migrant labour living in major cities and towns saw the only hope in leaving for their villages. This reverse migration has not only increased the chances of the virus spreading it has also shown that the state is not regarded as their messiah by these millions of people.
It is the failure of the administration that it made no arrangements for them. The mass migration could have been prevented and the repercussions on the economy would have been less severe. In absence of means of transport, hundreds and thousands of malnourished and starved labour set out on foot. Others waited with their families at bus depots, desperately wanting to go home and escape starvation, even as the government gave assurances of helping them. The handkerchiefs and sari pallus serving as their poor masks cannot hide their helplessness.
Scenes on TV of the mass exodus of migrant labour present a very disturbing picture. Even if the government manages to ensure essential supplies, there will be a shortage of labour. With sealing of state and district boundaries, the movement has now been arrested, but India’s informal labour cannot afford to stay idle.
This bed-ridden economy seeks urgent relief to counter the effects of a pandemic. The government has announced a $22bn relief package for the country’s poor, which includes measures like cash transfers of Rs 2000 to farmers and registered migrant-labour, an ex-gratia amount of Rs 500 per month for 200 million women registered under Jan Dhan, food security, cooking gas cylinders, insurance cover for healthcare workers, collateral-free loans for self-help groups, financial assistance for registered construction workers, among others. But the success or effectiveness of these measures will entirely depend on how effectively the government raises the financial resources and puts them to use. Loopholes and drawbacks in the delivery mechanism are secondary challenges.
The financial resources can be raised by tapping into the domestic savings. Timely and fast-paced provision of benefits of already existing schemes can also go a long way in containing this economic meltdown. Resources can be shifted from other schemes to social security schemes till the economy shows signs of recovery. As a supportive measure, greater amount in form of direct cash handouts can also be transferred to those workers who have lost their source of livelihood in this viral outbreak.
An economy does not run on acronyms but on wheels. The clampdown ordered by the government has brought the economy to a standstill. Sealing of district and state boundaries is not the way out. The way out is better administration and better management at grassroots level. The palliative measures should not just cease at PM seeking forgiveness for his hard decision.
The writer teaches Economics at BGSBU Rajouri.