Although the three-week national lockdown of the Indian economy ordered by the Central government on March 25 is undoubtedly well intentioned, it is likely to prove a good prescription overdose — a cure that’s worse than the disease, in the memorable phrasea of US President Donald Trump. During the past three months since it claimed its first victim in the Hubei province of China in January, coronavirus has spread across the world with lightning speed to claim 108,907 lives and infected 1.78 million people in 198 countries (April 12). In India it has claimed 289 lives and infected an estimated 8,504 citizens while spreading panic and chaos.
As explained by prime minister Narendra Modi in a nationwide television broadcast to the citizenry on March 24, the lockdown is necessary because the Coronavirus, aka Covid-19, is highly contagious, and causes severe respiratory problems with a high likelihood of death, especially in ailing elderly people. Therefore social distancing, minimising contact with strangers, avoiding crowds and workplaces — because Covid-19 is initially asymptomatic — can slow down its spread. The pervasive fear in all countries worldwide, including the US, UK, Italy, France, Singapore, Indonesia and Hong Kong is that the number of serious hospitalisation cases may overwhelm their health infrastructure.
Given that India’s health infrastructure is many degrees inferior, it’s indisputable that a national lockdown as ordered by the Central government is necessary. However misgivings on the duration of the lockdown and adequacy of the official relief package amount of Rs.1.70 lakh crore announced by Union finance minister Nirmala Sitharaman on March 26, are legitimate.
In this connection, it’s important to appreciate that the socio-economic profile of India is vastly different from the developed OECD countries and China. Over 90 percent of India’s 450 million workforce is employed or self-employed in the informal sector. These citizens subsist on very low wages and incomes with over 100 million of them being migrant labour with entire families surviving on their daily wages.
Moreover the size of the average ill-equipped Indian home is 504 sq. ft with a third less than 258 sq ft. Forcing 400 million citizens to suffer loss of employment, daily income and stay “at home” 24×7 in ill-ventilated squalid conditions is impractical and cruel. Nevertheless a massive income transfer scheme for over 400 million citizens for the next 12 months is imperative to enable them to recover and rehabilitate.
In the March issue of EducationWorld, your editors presented a detailed schema under which by reducing establishment and defence expenditure, slashing non-merit subsidies and accelerated privatisation of public sector enterprises and also imposing modest cesses on direct taxpayers, the Central government can mobilise Rs. 8 lakh crore for investment in public education and health (see https://www.educationworld.in/ union-budget-2020-21-small-changefor-human-capital-development/). In light of the Covid-19 black swan national emergency, this amount should instead be urgently distributed among 150 million (of a total 250 million) lowest income households countrywide by way of direct money transfers into their bank accounts or encashable RBI cheques. This will provide them a basic income of Rs.4,444 per month for the next 12 months. In addition their foodgrains ration quotas under the national public distribution system should be immediately doubled — Food Corporation of India has more than adequate stocks rotting in its godowns. Placing purchasing power into the hands of lowest income households for the next year will tide over the populace for one year, and sustain demand within the economy.