Partha Chakraborty-
In “Precious Moments”, the video starts with Indian Prime Minister Modi deep in contemplation, holding out a plate of grains for a male peacock to peck from. The peacock, resplendent in blue, appears to have a special bond with Mr. Modi; a series of stills progress through rendering in flute, santoor, and others that sounds like a morning raga to an untrained ear. Serene, and almost divine. Elsewhere Mr. Modi is seen strolling past the bird with feathers fanned out, almost trying to fly, only to close and bow as he comes close.
Elsewhere in India, “Randhir Singh walked in circles, hopeless” in his one-acre cotton field by the railway tracks deep in debt even before the pandemic struck. “In early May, he killed himself by lying on the same track.” With machines barely turning, laborer families have cut down on milk, forget about topping up their sim-cards. Construction sites are deserted, factories highways have barely any traffic other than food grains, education is stalled everywhere but in bigger cities.
Google Mobility Report estimates visits to retail and entertainment down almost 40 percent year on year, more than twice the drop at US or Brazil – and that data only covers about 28% of Indians who have smartphones. Rating agencies estimate Indian GDP to fall more than 10% in FY’21, in the first quarter of which GDP fell by 23.9% over the same period last year. Indian GDP calculations are notorious for overlooking much of the unorganized sector outside of agriculture, whisper numbers of the impact of COVID-19 on the Indian economy are many times worse. Already in jeopardy is India’s standing as the fifth largest global economy, while 400 million risk falling back into poverty by some estimates.
The Center did come up with a stimulus totaling some USD 280 Billion to the unorganized sector, migrant labor and small farmers. Economists estimate much of it is behind target as farmers are less keen on taking in more debt – especially if they were not cultivating essential grains in the first place. Some of the stimulus money is reallocation, some are long-horizon allocations with limited short-term effect, and some are stuck in bureaucratese; all in, not much economic impact.
It might be easy to overlook significant accomplishments during COVID times. Prof. Kaushik Basu of Cornell University labeled India’s approach “lockdown and scatter”, a “failure”. Debraj Ray of NYU opined that “The Indian exhibits a perverse politics of visibility: draconian on high-profile measures such as lockdown, weak on relief measures that are less easily observed”. I strongly disagree.
India’s explicit goal at the start of the pandemic was to contain the spread. Any sane person with an understanding of where India was at the start of the pandemic must agree. that India spends barely USD 69.29 per capita on health, compared to USD 1061.15 globally and USD 10,246.14 in the USA. India’s accomplishments are even more remarkable given that raw, admittedly very unpleasant, reality. Willful ignorance, worse, avoidance of data for political expediency, may have something to do with comments like the ones above.
Eight months since the first diagnosed case, we have to accept India has been remarkably successful – in spite of vastly inferior medical infrastructure and rampant economic malaise. India has had 5.73 deaths per 100,000 population, compared with 58 and 62 for the US and Brazil respectively. Case Fatality Ratio at 1.7% remains far below the 3% benchmark the other two hover around. If we look at the spread of the disease, it becomes obvious that serious inflection happened after the country opened up somewhat in May, spread of the disease accelerated as opening up gained steam, but, thankfully, did not accompany a rise in case fatality ratio.
Hats off to the Indian medical fraternity who are doing yeoman’s job despite every obstacle they face.
On the economic front too India’s policies have been by and large well received and reflect priorities as is. Saving lives does require feeding them. Current data points to 50 percent higher crop sowing and 100% increase in fertilizer consumption this monsoon season. As migrant labor trekked home – many under harsh conditions no doubt – they found work on MNREGA scheme that guarantees 100 days of paid work – 40 million sought these benefits compared to 23.6 million on average in 2019; allocation was at its highest ever. Supply, of subsidized (or free) grains now covers 800 million people. Unemployment swelled to 23.5% but came down to 8.5% today, arguably around the same level as the US.
Worries cannot be overlooked, though. NPA’s are expected to rise 14 percent, all leading indicators are still in a serious recession zone. MNREGA does not cover cities, guarantees 100 days of work only and some may have reached the limit. Small and micro-enterprises, the biggest single employer outside of agriculture, have minimal to no access to formal credit, all government measures will likely fall flat. Medium-sized enterprises expect revenues to drop by 50 percent this year. Without these small and medium enterprises, the supply chain of the formal sector will be hobbled at best. Food subsidy is extended by another 3 months, risking running down grain reserves unless good harvest is secured. The list goes on.
Lockdown has brought time, now the focus needs to be on economic resurgence. Five broad proposals are highlighted below.
First, take jobs back to where workers came from with vastly expanded public works programs. Migrant workers are, legitimately, afraid of coming back to cities. Construction projects at the block level – e.g., schools, hospitals, subsidized housing, irrigation channels/dams, rural roads, cell-towers, rural electrification – can utilize their skills and keep them reasonably close to home. Second, pandemic gives a good opportunity to move many small manufacturing outside of cities and into smaller towns, if not villages. Workforces in informal sectors are mostly from villages and smaller towns, the reason these workshops are in cities is proximity to the owner-operator. With broadband and better roads, that is almost moot. Third, nationwide broadband, fiber optics even, should be another area of accelerated focus as it can easily spur innovations at the bottom of the pyramid if we truly give them access to the broadband justifying large allocation needed. Fourth, It might also be a good time to transfer a lump sum amount of money to every individual – something easier now with Aadhaar and other recent innovations. This will restore confidence in people’s minds, spur consumption, and restore property values. Fifth, spend political capital on labor reform.
Archaic laws deter corporations, especially foreign enterprises, from taking full advantage of the pandemic to diversify their supply chain – these laws must go. Some states have already taken the initiative, we need a national push that Modi’s mandate can deliver.
I wish Mr. Modi lets the bird fly on his own. A peacock is beautiful on the grounds of the Lok Kalyan Marg residence of the Prime Minister but its boundaries are still unnatural to him. Just like the boundaries imposed on India’s economy by the pandemic are unnatural and harmful long term. It is time to see the economy spread its wings.
No more peacocking please, Mr. Prime Minister. You too, Prof. Basu. It is time to let the bird, and the economy, fly.
